How to Calculate Income Tax with Mutual Fund Software?

The financial year has just ended, and in the next 3-4 months, taxpayers will begin filing their income tax returns. If you're wondering how mutual fund software can simplify this process, you're in the right place. Let us help you explore how it works.

Mutual Fund Distributors (MFDs), we know you're always looking for ways to save tax money for investors. A well-informed investor trusts their MFD more, and ensuring they don't pay unnecessary taxes is one way to strengthen that trust.

What Do MFDs Have to Do with Taxes?

MFDs play a crucial role in helping investors make informed financial decisions. While their primary responsibility is guiding investors toward wealth creation, they also need to help them optimize their tax liabilities.

When investors pay more tax than necessary due to a lack of tax planning, it can impact their trust in financial advisors and MFDs. Providing investors with a simple tool to calculate their income tax can add significant value to an MFD’s services.

What Is an Income Tax Calculator?

An Income Tax Calculator is a tool in the best mutual fund software like that offered by REDVision Technologies that helps individuals estimate their tax liabilities based on their income, deductions, and applicable tax slabs. It is available for both the old and new tax regimes, ensuring investors can compare and choose the best option for their financial situation.

Most advanced portfolio management software includes an integrated Income Tax Calculator that supports calculations for every financial year up to the current one. This feature enables MFDs to help their investors with tax planning effortlessly.

How Does the Income Tax Calculator Work?

Using the Income Tax Calculator within a wealth management software is simple. Investors or MFDs need to enter the following details:

General Information

● Choose Financial Year, Assessment Year, & Regime
● Select Age Slab
● Gross Total Income (CTC)

Deduction Information

● HRA, Medical, Conveyance & Professional Tax
● Section 10A & Professional Tax
● Deductions under Section 80C, including ELSS, Life Insurance, NPS, PF, PPF, etc.
● Deductions under Section 80CCG for RGESS with 50% deduction up to Rs. 50,000
● Deductions under Section 80CCD for NPS (National Pension System)
● Deductions under Section 80D for health insurance premiums (self, parents)
● Deductions under Section 80TTB for interest received on savings bank accounts
● Deductions under Section 80G for donations, with a maximum of 10% of gross total income
● Deductions under Section 80E for interest paid on education loans
● Tax benefits under Section 24 for interest paid on home loans, with a maximum limit of Rs. 1.5 lakh to Rs. 2.5 lakh
● Deductions under Section 80DDB for medical expenses, up to Rs. 1,00,000
● Standard Deduction of Rs. 75,000

Understanding the New Tax Slabs

For example, under the new tax regime, if a person has a taxable income of Rs. 10,00,000, the tax calculation will be as follows:

● Income up to Rs. 4,00,000 is tax-free.
● Income between Rs. 4,00,001 and Rs. 8,00,000 is taxed at 5%, which amounts to Rs. 20,000.
● Income between Rs. 8,00,001 and Rs. 10,00,000 is taxed at 10%, which amounts to Rs. 20,000.
● Total tax liability before cess: Rs. 40,000.
● A 4% education cess is applied on this amount, bringing the total tax liability to Rs. 41,600.

Similarly, additional surcharges apply if the income exceeds Rs. 50 lakh, Rs. 1 crore, or Rs. 6 crore. The software ensures that all calculations are accurate and updated as per the latest tax rules.

Send Report to Email

If you wish to share these details with your investors, they can receive a detailed tax report directly via email by entering the following details:

● Name
● Email
● Mobile Number
● City

How Does This Calculator Help MFDs?

1. Informed Tax Planning – MFDs can guide investors in tax-efficient investment strategies, such as ELSS, NPS, and tax-saving fixed deposits.

2. Accurate Tax Estimation – The tool ensures that your investors get a clear picture of their tax liabilities, avoiding unnecessary tax payments so they can make the most of their hard-earned money.

3. Improved Investor Trust – By assisting investors in tax planning, MFDs enhance their credibility and client relationships and also retain them in the long run.

4. Easy Decision-Making – Investors can compare old and new tax regimes and choose the most beneficial one.

Conclusion

Calculating income tax can be a complicated task, but the software simplifies the process for both investors and MFDs. By offering a built-in Income Tax Calculator, MFDs can help investors save taxes and time both, plan better, and strengthen their financial trust.

If you're an MFD looking to enhance your services and help investors with tax planning, adopting a robust software with an integrated tax calculator is the way forward.