INCOME TAX - CLASSIFICATION OF INCOME salary -property - gains !

INCOME TAX - CLASSIFICATION OF INCOME salary -property - gains !
INCOME TAX - CLASSIFICATION OF INCOME salary -property - gains !

Table of Contents

* Income under salary
* Income under property
* Income under trade or profession
*Income under capital Gains
* Income from other sources
  • According to Income Tax Act, 1961, the Central Government gives the right to recover tax from any person's income. According to Section 14 of the Income Tax Act, the tax calculated and taxed on it has been classified under five heads. Which is as follows: -
  • Income under salary
  • Income under property
  • Income under business or profession
  • Income under Capital Gains
  • Income under other sources
Tax-dependence of a person's income depends on the income tax act according to Income Tax Act 1961, which is classified as income under which head.


Under section 16, when an employer employs a person as an employee to work in his organisation.

 The employee works according to the employer's order, in which, if he gets income in the form of pay, then such income will be classified in this head.

Any employee paid or paid on behalf of the employer or former employer during the previous year will be taxable under this head, even if the services of the amount of paid wages are provided in this accounting year.

The basis of income from pay, the basis of the tax paddy is usually on the "payable" basis. Thus, the salaries available to an employee are not received without the sum of tax.

This income is collected by adding all kinds of allowances and bonuses and commission, gratuity, pension, house rent allowance. Some allowances have to be paid in full and some partially to be paid.

 Gifts offered by the employer in the salary of the employee whose value is more than Rs 50000 are also included. If the salary of an employee is more than 250000, then the tax is automatically filled by the employer. And this tax is filled up to 7th of the following month. The tax is levied on the tax slab rate.

Example: - Sharma is appointed on the job post of Sales Manager in Time Zone Pvt Ltd.
He is getting 40,000 rupees per month, which is due on the last day of the month but payment is made on the next 7th of the month, along with Sharma has paid 75,000 advance salary to get his son a bike. Which months will the income tax year 2018-19?

In the appropriate example, keeping the two things in mind, Yoga is the first salary payable on the last day of the month and another 75,000 advance salary.

Calculation of salary income, payment and payment which is done on that basis first. This means that the salary of the month is taxable in the same month, so Sharma will have to pay the salary of April 18 to March 19 and 75,000 advances.


Under section 22 of the Income Tax Act, 1961, there is a right to collect tax on income of property.

According to Section 22 "Taxes at the annual value of the land attached to a building or building shall be taxed in this head, the taxpayer who owns property and is not using his business or profession".

Income tax yoga in this major will depend on whether or not there is a tax on the income received from the first building or land.

Here the building means the building used in all types of residential, business, profession, auditorium, entertainment program. Etc.

Taxes are imposed on the income of land belonging to the other buildings i.e., where land is not attached to any building, income from land can be taken as business income or income from other sources.

Tax is levied by owner of land belonging to third house and buildings i.e. where the receiver of income from buildings engaged in buildings and buildings does not own the building, the income is not there in this head but in other major such as business income Or other sources of income.

For example, a lessee can not take income from the sub-house in income under the property, but in other major such as business income or income from other sources because the lessee is not the owner of the house

According to Section 22 to 27, if a person has given his house to someone else for use and the person pays something in exchange for the use of that house, then the income is taxable in this major. Income will be taxable in the year tenant has received rent.

If the rent of 2012 was Rs 47000, out of which 25000 was received in 2012 and 22000 is received in 2014, Rs 25000 will be taxable in Rs.22000 in 2012.

Sometimes a landlord has to pay tax at the house even if he is not a tenant. It happens in a situation where when a taxpayer has more than two houses, he has to leave any two houses and pay taxes on the rest of the house.

For example, if Singh Shahab has four houses he will have to leave any two houses and do it on two houses.

In this head, tax takes 30% after deduction. Also, to buy or make a home, the interest paid on the loan received is exempted.

Example: -

Khan Shahab has three houses but the owner is only the first and the second, out of which he has lived in one and has rented the other two, earning 2500 every month from the second house 2000 and the third house But in the year, both are empty for two months. Khan Shahab wants to know how much income tax yoga will be?

In the appropriate example, Khan Shahab will have two heads of income, income from first property and second income from other sources.

Income of second house 20000, income from other sources will be assessed as Khan Shahab himself is not a boss and the income of Rs 25000 from the third house will be in income from property.


According to Section 29 Income is taxable in this head when income is from a profession or profession. Business can be any type of business, manufacturing, construction, import, export services.

Here, attention and loss are given in this head. If there is profit, it becomes taxable in the same year and if the loss occurs, it sets off with the benefit of the coming years i.e. if any business lost 50000 rupees in 2018 and in 2019, 100000 If the profit is made then 50000 loss will be set off this year and it will be taxed at Rs 50000 only.

After deducting all the expenses from the sale here, income is taxed. Like all expenses related to business, salary of employees, pension, bonus etc. are reduced after all the taxable.

Example : -

 ABC Ltd. is doing business of import export in which the year sales are 10 million and its expenditure related to business is Rs 25 lakh for the employees, Rs 15 lakh for the office, 55 lakhs purchased and other expenses is 3 lakhs, then ABBC. How much will the income from the trade of the company?

In the appropriate example, A.B.C. Ltd. runs a business i.e. the calculation of income will reduce all expenses from the sale. A.B.C. The income of Ltd. will be 2 lakh and it will be taxed at 2 lakh.


Capital gains which also we call capital gains, the income to sell any capital asset is called capital gains. Capital capital is that which gives us capital gains such as: - Buying or selling any capital item such as property, jewelery, car, stock, bond etc. is tax.

For example ,

 if Piyush sold his home to Ram, which was bought in 500,000 and sold in 1000000, then Piyush would have to pay capital gains on the profit of 500000.

This also happens for a longer period and also for a short period and determining the duration of each object is different.


Such income which does not come in the above four heads, is taxable in this head.

Such as: dividends given by foreign companies, interest from the bank, income from lottery, income from horse race, income from card games, interest on fixed deposits, gift gift given by Hindu Undivided Family Income, and any other source income.

thanks for the time . 

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