HEADS OF INCOME (14, 14A)

A person may have taxable income from different sources. All

these different sources of income are classified and assessed under
certain groups or heads. These are known as “Heads of Income”. The
gross total income is the aggregate of the incomes from various sources
under the following heads of income:

 Income from salaries,

 Income from House property,
 Income from profits/gains of business or profession,
 Income from capital gains, and
 Income from other sources.
 SALARIES (SECTION 15 to 17)
Salary means any payment made at regular intervals for
services rendered. In other words, remuneration paid to a managing
director of a company as well as to a clerk would be called ‘salary’.

The term ‘salary includes:

 Wages
 Any annuity or pension,
 Any gratuity,
 Any fees, commission, perquisites or profit in lieu of or in addition
to any salary or wages,
 Any leave salary,
 Any advance of salary, etc.
 INCOME FROM HOUSE PROPERTY
(Section 22 to 27)

The other head of income under which the total income is to

be computed is ‘Income from House Property’. According to section 22,
income from house property means the annual value of property,
consisting of any building or lands connected thereto, of which the
assessee is the owner. However the properties or the portions of such
properties which are occupied by him for the business or profession
carried on by him are not covered under this head.

Income from house property is calculated under 4 conditions:

I. The property must consist of a building or land attached to or
connected with such building.
II. The assessee must be the owner of the house property.
III. The property should not have been occupied by the assessee for
the purpose of carrying on his business or profession.
IV. It is the ‘annual value’ of the house property which is taxed under
the head ‘Income from House Property’.
 INCOME FROM OTHER SOURCES
(SECTION 56 to 59)

Income from other sources is a residuary head and covers all

the incomes which are not covered under the other heads of income.

EXAMPLES:

 Dividends
 Annuity deposit
 Winnings from lotteries, crossword puzzles, races, card games,
and other games or gambling or betting of any kind.
 Refund of deposit (and interest) under National savings Scheme
1987, etc.
 DEDUCTIONS
(SECTION 80 A,80C,80CCC,80D,80DD,80E,80U)

Deductions consist of all those items, which are allowed to be

deducted from the ‘gross total income’, while computing the total
income.

EXAMPLES OF DEDUCTIONS:

a. Deduction in respect of payment for life insurance premia,

deferred annuity, provident fund, etc (Section 80C).
b. Deduction in respect of contributions to certain Pension funds
(Section 80CCC).
c. Deductions in respect of medical insurance premium (Section
80D)
d. Deductions in respect of maintenance (including medical
treatment) of a dependent who is a person with disability (Section
80DD)
e. Deduction in respect of interest on loan taken for higher
education (Section 80E)