Learning how to calculate income tax is an important skill to have. Here is how income tax is calculated:Calculate or ascertain your gross income from your salary, house property, or capital gainsCalculate your net taxable income by subtracting exemptions and deductions such as deductions on investments and insurance.To compute the tax, calculate eligible gross exemptions and gross income tax for the financial year. Exclude any credits you may be eligible for. You should know about various components of income tax before you calculate your tax. Income tax is calculated on taxable income based on the applicable income tax slab. The easiest way to arrive at an accurate figure is to use the income tax calculator to calculate your income tax.