Heads of Income

In the Income Tax any income earned by a person is broadly categorised into five heads of income. Any income earned to be taxed must come under any of the five heads of income. The five heads of income are:

1. Income under Head Salaries: This head taxes the income earned by an individual as salary from any firm or organisation.

2. Income from House Property: This head taxes rental income received by any person from way of renting of any immoveable property.

3. Profits and Gains of Business or Profession: This head of income broadly covers income earned by a person as a result of some business or professional set-up by him.

4. Capital Gains: This head of income taxes the income earned on sale of any investment in form of gold, precious ornaments, shares, etc or immoveable property.

5. Income from other Sources: This head of income covers any income which is not chargeable to tax under any of the above heads of income. Any income including gambling or profit/loss on running of race horses, camels, interest income , etc are chargeable to tax under this head of income.

We will take each Head of Income one by one but first in the next post we will understand meaning of the  term “Income” itself:

…Contt.

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3 Responses to “Heads of Income”

  1. Rohit Says:

    Sir,

    I want to ask one thing, i am living in a 2 bedroom flat in Delhi and both my father and I am furnishng our income tax return.

    To save tax, can i pay rent to my father who is the owner of the flat in which both of us reside and if yes, under what rule is it OK and the link for the rule.

    Regards

    Pls reply at:
    Rohitshakti_sehgal@yahoo.com

    • Viviek Says:

      While calculating HRA exemption acutal rent paid to landlord is taken . The payment of rent must be justified. If u r really paying the rent then it will be taken into account no matters that both the tenant and owner live under the same roof .

  2. Lalit Aggarwal Says:

    yes rohit u can,but u should give cheque of rent to ur father. But remember one thing that rent paid is added in the income of ur father.

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