New Delhi: Everyone who earns or gets an income in India is subject to income tax. For simpler classification, the Income-tax department breaks down income into five main heads.
As per the income tax act 1961, one’s income is split into 5 classes — income from Salary, income from home property, income from business revenue, income from investments/capital belongings, and income from different sources. According to tax and funding specialists, an income a particular person can earn in numerous methods however Section 14 of the Income Tax Act 1961 stipulates these incomes in these 5 classes. So, a taxpayer is suggested to divide one’s income into these 5 classes for simplifying its job throughout ITR filing.
- Income from Salary: Income earned from salary and pension is taxable under this head of income
- Income from Business and Profession: Profits earned by self-employed individuals, businesses, freelancers or contractors & income earned by professionals like life insurance agents, chartered accountants, doctors, and lawyers who have their own practice, tuition teachers are taxable under this head.
- Income from Capital Gains: Surplus Income from sale of a capital asset such as mutual funds, shares, house property, etc is taxable under this head of Income.
- Income from House Property: Income earned from renting a house property is taxable under this head of income.
- Income from Other Sources: Income from savings bank account interest, fixed deposits, winning in lotteries is taxable under this head.