What are the sources for government to tax

What are the sources for government to tax

Income from Salary-

The amount received from employer to employee is charged under the head salary. Salary includes basic salary or wages, any annuity or pension, gratuity, advance salary, leave encashment, allowances and perquisites. Employer will give you Form 16 which contains all the earnings, deductions and exemptions.
The aggregate of the above incomes, after exemptions are known as Gross Salary and this is charged under the head income from salary.
Basic salary along with commissions and bonuses is fully taxable.

Income from House property-

Any residential or commercial property will be taxed. Even a piece of real estate is not let out, it will be considered as earning from rental income and you should pay tax on it.
The Annual Value can go through a standard deduction of 30% and if you reduce the interest on borrowed capital, then you get the value which is charged under the head income from house property.

Income From business-

Income earned through your profession or business is charged under the head “profits and gains from business or profession”. The income chargeable to tax is the difference between the credits received on running the business and expenses incurred.

Income from Capital Gains –

Any profit or gain arising from transfer of capital asset held as investments are chargeable to tax under the head “capital gains”.
Profits or gains can be of two types – Short term capital gains (STCG) or Long term capital gains (LTCG).
If you hold a capital asset for not more than 12 months in case of shares or not more than 36 months in case of any other asset; then the gain arising on transfer of such asset shall be short term otherwise it will be long term capital gain.

Income from Other Sources –

It is the residual head of income. So if your income doesn’t fall in any of the above category, then it shall be taxed under income from other sources. Some of the earnings that can be taxed under are:

Interest earned from bank savings,
Winning from lottery,
Interest earned on Fixed Deposits,
Gifts etc

Income tax is payable by an assessee on his total income from all the source of income. All the heads of income are mutually exclusive. If any income is considered under particular head, it will not be taken into consideration for another head.

Tax saving for Freelancers, Professionals, Trader and Web based agencies

10 mins of consultation. Place a request.

Some of the featured articles from our knowledge center

Business2 13a51fd54d37dfeead10bd04c34a46671e69097acf6d8002d2665eb06b5cf58f
What is the income tax payable on partnership firm

As per section 4 of partnership act 1932, partnership means the relationship between the person who are agreed to share the profits of business car...

Business3 1835184f1312bba0b871fddd223a24dd62299180ed03a78d9e4098813c851963
What is business income on presumptive basis under section 44ad and 44ada

As per section 44AA income Tax act 1962, every person who is carrying on business or profession is required to maintain books of accounts. However,...

Business1 8b8cee9b60a38e9df92fb5b897e7c09195532b3d70b7ec28803a600cf2ce60cd
What is GST and different types of GST forms

The Prime Minister approved “The constitution amendment bill for Goods and Service Tax”(GST) in the Parliament Session (Rajya Sabha on 3 August 201...