Heads of Income

Income From Salaries

If you are a salaried employee, your salary will be considered on this head. Your employer had deducted any TDS (Tax Deducted at Source) per your income tax slab, and they pay to the government.

Any income received by employee form his employer considered in this head, here employer and employee relationship are must, between the payer and the payee.

Once the total amount of income is calculated, the gross salary is taxed under this head.

Apart from the basic salary, wages, even the gratuity, pension, annuity, commission, fees, perquisites, Advance salary leave encashment, and profits that you receive from your employer will go through TDS deduction.

NOTE:

If a person having Salary income outside India and he already paid taxes in respective country, then Double Taxation Avoidance Agreement (DTAA) are placed in India & respective country then Income earned outside India/respective country is treated as salary Income.

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Income from House Property

Tax on Income from House Property is the tax on rental income which is being earned from the House Property.

The income earned by the ownership of a property is said to be Income from House property. If a taxpayer owns a house property and rents it, the rent received from that property is taxable.

According to the Income tax Act 1961 Section 22 to Section 27

All types of properties are taxed under the head ‘income from house property’ in the income tax return.

Section 22: Basic of charge:

Income is taxable under the head income from house property if the following three 

Conditions are satisfied: —

i) The house property consists of any building/land Building can be residential house, factory building, shops, offices etc.

ii)The assesses should be owner of the property.

iii)The property should not be used by the owner for the purpose of any business or profession carried on by him the profits of which are chargeable to income tax.

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Income from Profits & Gain of Business/Profession

Income from business/profession includes profit/loss from business or profession, any interest, salary or bonus to the partnership of a firm.

Any type of income that you are earning from manufacture, trade, commerce, or profession is chargeable under the business income head. Your expenses will be deducted from your revenues to calculate your profits, and the income tax will then be applicable under this head.
Any kind of bonus, salary, or profit received from a partnership in a business organization will also be consider under this head of income tax.

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Income from Capital Gains

Income from capital gains includes long term capital gains (LTCG) & short-term capital gains (STCG) on sale of any capital assets.

Any profit gained from sale of moveable & immoveable capital assets, investments in stocks, mutual funds, property, and many other types of investment that profit consider under the head income from capital gains.

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Income from Other Sources

Any Income which is not comes under the above mentioned 4 heads of income shall be chargeable under this head of income provided that income is not exempt from the computation of total income.

Income from other sources includes interest from bank deposits, & securities, dividend, winning lotteries, prize money etc.,