Chapter Five

Income and it’s Classification

 Income defined
Income is what comes in from outside. None can make profit by dealing
with himself or herself.
Characteristics of income:
 Periodical return
 Received from third party
 Certain sources
 Tainted with illegality
 Revenue received/ Income in kind
 Received or accrued
 Real not fictitious

Capital Vs. Revenue Income and Expenditure

 Classification of Income
• Domestic Income:
i. Income received in Bangladesh
ii. Income deemed to be received in Bangladesh
iii. Income accurses or arises in Bangladesh
iv. Income deemed to accrue or arise in Bangladesh
v. Other deemed income
• Foreign Income: Income accrues or arise outside Bangladesh
 Types of income for assessment purpose
• Non-assessable income: Income which are not included in
calculating total income. Income from DPS, Pension, Gratuity etc.
Govt enjoys the power to include or exclude any income.
• Assessable income: It is of three types
Tax free income: These are included in calculating total income but
tax rebate is allowed on these. Like income from partnership firm
and AOP if tax was already paid by partnership and AOP.
Tax credit income: Investment allowance for tax rebate. These are
included in calculating total income and increasing tax rate.
Currently investment tax credit is 15% on total investment and
maximum allowable investment limit is 30% of total income
excluding employer’s contribution to RPF and interest received
from RPF or 1,500,000.
Tax payable income: Income on which the taxpayers pay the tax.
 Sources of Income
Total income of the assesse falls under 7 heads mainly:
•Income from salary (Section 21)
•Income from interest on securities (Section 22)
•Income from house properties (Section 24)
•Income from Agriculture (Section 26)
•Income from Business or profession (Section 28)
•Capital gain income ( Section 31)
•Income from other sources (Section 33)