• TO-

• By-
• SANJEEV KUMAR
TANISHKA SAXENA
21185000171
• (ASSISTANT
PROFESSOR)
 INTRODUCTION
 As per the section 14 tax act ,1961 ,there are five main income tax
heads for an individual. The computation of income tax is an
important part and has to be calculated according to the income of a
person. The government has classified the sources of income under
separate heads and then the income tax is computed accordingly.
The provisions and rules are according to the details mentioned in
the income tax act 1961.
 FIVE MAIN HEADS OF INCOME
 Income from salary
Income from House property
Income from business
Income from capital gains
Income from other sources
 INCOME FROM SALARY
 The first head of income tax heads of income from salary.This clause
Essentially assimilate any remuneration which is received by an individual
in terms of services provided by him based on a contract of employment.
This amount qualifies to be considered for income tax only if there is an
employer- employee relationship between the payer and the payee
respectively. Salary also should include the basic wages or salary,advance
salary,pension, commission, gratuity as well as the annual bonus .
 INCOME FROM HOUSE PROPERTY
 Income is taxable under the head 'house property ' if it is earned from a property
consisting of any building or land. Individual taxpayers have the option to report their
income from house property using different income tax return . According to the
income tax act 1961,section 22 to 27 is dedicated to the provisions for the
house property or land that he or she owns . An interesting aspects is that
the charge is derived out the property or land and not on the amount of rent
received.
 INCOME FROM BUSINESS
AND PROFESSION
 Any income earned by a taxpayer with an intention to earn a profit is covered under
the head business and profession. There are 3 types defined for
Businesses/profession under the income tax act: Non-Speculative
Businesses/Profession: Includes profits/loss from all the normal business carried by
a taxpayer. Business profits is the third head of income tax act after salaries and
house property income.This head is used to classify aggregate income which the
taxpayer generates through business or professional activities . While filing an
income tax return the taxpayer must declare the amount of profits and gains of
business or profession in case the assessee is having any such income.
 INCOME FROM CAPITAL GAINS
 Capital gains are the profits that are realized by selling an investment, such as
stocks, bonds, or real estate. Capital gains taxes are lower than ordinary income
taxes, providing an advantage to investors over wage workers. Capital gains refers
to any profit or gain that arises from the sale of a capital asset. This gain or profit is
charged to tax in the year in which the transfer of the capital asset takes place.
When there is a transfer sale , exchange, extinguishment, compulsory acquisition,
conversion, maturity,redemption etc of a capital asset then capital gains are charged
to income tax. Also,if an asser is sold by the person who inherits it , capital gains tax
will be applicable.
 INCOME FROM OTHER SOURCES
 . Dividends
 Dividends are taxable under ‘income from other sources,’ based on the residential status of
the source company that paid out the dividend.
 2. Dividend from an Indian Company
 If any company has paid Dividend Distribution Tax (or DDT) on this receipt of income, the
dividend is exempted from tax. Under Section 11 of the Act, however, if a resident individual,
firm, or HUF receives dividends over Rs 10 lakhs from an Indian company, then the excess
amount over Rs 10 lakhs is subject to taxation at 10%.
 3. Dividend from a Foreign Company
 Dividends received from any foreign company are subject to taxation under ‘Income from
Other Sources.’
 4. One-time Income
 One-time incomes such as winnings from lotteries, horse races, crossword puzzles, card
games, gambling or betting of any form are categorized under ‘Income from Other Sources.’
 5. Interest on Compensation
 Interest received by you (as assesse) on the amount of reimbursement or compensation paid
out in situations such as compulsory acquisition is subject to taxation under ‘Income from
Other Sources’ head.
 6. Gifts
 Gifts received in the form of any sum of money, movable or immovable property, are also
taxable.