To know how to calculate effective tax rate, you must start by calculating the total tax you owe for the financial year. This includes income tax, any applicable surcharges, and education cess. Use the applicable tax slabs based on your income level to compute your total tax. Identify your gross total income for the year. This includes all sources of income such as salary, business profits, capital gains, and income from other sources. Subtract eligible deductions from your total income, as defined under sections like 80C, 80D, etc. The resulting figure is your net taxable income.
How Do I Calculate Effective Tax Rate?
To understand how do you calculate effective tax rate, you can use the following formula:
Effective Tax Rate= (Total Tax Liability/Total Income) ×100
This will give you the effective tax rate as a percentage of your total income.
Example: If your total income is Rs. 10,00,000 and your total tax liability is Rs. 1,50,000, the effective tax rate would be: (1,50,000/10,00,000) ×100 = 15%
I hope now you have a clear idea about how to find effective tax rate.
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How to Calculate Effective Tax Rate?
Uppal
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50 days
2024-09-25T11:32:58+00:00 2024-09-30T06:45:47+00:00Comment
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