There are five types of heads of income they are :
1. Salary 2. Income from house property 3. Profit from business or profession 4. Capital gains 5. Income from other sources Five heads of income is added and disclosed in the income tax return, the total taxable income -after deductions then it is calculated as income tax slab rates of a taxpayer. Income from salaries Incomes taxed under head salaries if employer and employee between payer and the payee. This relationship is not exist , the income would not be deemed to be income from salary. In this relationship the income shall not be assessable under this head of income. Income from house property Tax on income from house property is a tax on rental income which is being earned from house property. The property is not rented out, tax levied on expected rent which would have been received if property was rented out. The income that is charged to tax on notional basis. TDS on rent @10% is also be deducted in case thee value of rent is more than specified limit, service tax on rent also to be levied in specific cases. Profit from business or profession Income earned from trade/commerce/manufacture/profession shall be chargeable under this head of income after deductions certain expenses. Income from capital gains Profits or gains arising from the transfer of capital assest effected in financial year shall be chargeable to income tax under ‘capital gains’ and shall be deemed to be income of the year in ehich transfer took place unless such capital gains is exempt under section 54, 54B,54D,54EC,54ED,54F,54G,54GA.
Income from other sources
Income which is not chargeable to tax under the above mentioned 4 heads of income shall be chargeable under this head of income provided that income is not exempted from the calculation of total income.