ICICI

Share on Facebook

Share on Twitter

Share on LinkedIn

Share on Email

Share More


Income is the money received by a person (individuals or business) periodically on daily, weekly, monthly, or yearly basis. Income includes monetary as well as non-monetary values of allowances and perquisites. All income is taxable under income tax unless expressly exempted.

According to Section 2(24) of Income tax Act, 1961 Income includes

(i) Salary
(ii) Profits and Gains from business and profession
(iii) Dividends
(iv) Voluntary contributions made by trusts, charitable institutions created wholly or partly for charitable or religious purposes
(v) Perquisites
(vi) Special or other allowances
(vii) Any sum paid by the company to the assessee in the form of interest
(viii) Capital gains
(ix) Income from other sources.

What is income and what are the different sources of income

The basic features of Income are

(i) Income can be received at a periodical basis whether daily, weekly, monthly or yearly
(ii) Income can be taxed at receipt or accrual basis
(iii) Income tax law does not distinguish between legal or illegal income
(iv) Income can be received on temporary or permanent basis
(v) Income received when in lump sum or in installment basis will be held liable to tax.
(vi) Under Income Tax Act, Income includes revenue or capital gains and even includes losses.
(vii) In case of individuals or HUF, gift received above Rs. 50000 during the financial year will be considered as income.

SCOURCES OF INCOME

A person may have various sources of income that can be computed under different heads of Income. The sources of Income can be categorized under 5 heads:

1. Income from salary

Income from salary is the remuneration which is received by an individual who is rendering services under any contracts which is taken by him. The contract should be under employment.

2. Income from House Property

A house property can be anything which is appurtenant to the land and it can be your house, your office, or can be a shop and also can be a building. The income tax does not distinguish between any of your commercial place or your house where you stay. All the properties are taxed under this head. An owner is a legal owner for objective of the income tax, owner is someone who can make use of every right of the owner and the right should not be use of on someone's behalf.

 

3. Income from Profits and gains of business and professions

This income is an income which is shown by the taxpayer after taking into consideration the amount showed under the profit and loss account. This income involves both of the amount even if it is loss which is in negative or profit which is in positive. So basically, the term ‘profit and gains' mean income which is in plus and ‘loss' means incomes which is in minus income. Under this head all the incomes are taxable whether it is legal or illegal. The income which is earned by the businessman in previous year shall be taxable. Income tax return for business and profession shall be filed on or before 31st July of an assessment year.

4. INCOME FROM CAPITAL GAINS

Any profit or gain which is earned by transferring the capital assets which was held for investment will be taxable under the head of ‘Income from Capital Gain'. The gain can be earned from any of the Short-Term Capital Asset and Long-Term Capital Asset. Only when the type of asset transferred is Capital Asset then only you can earn Capital Gain. In other words, if the asset which is being transferred is not capital asset then it will not fall under Capital Gain. Some examples can be like sell of house/flat, or selling of the shares etc.

 

5. INCOME FROM OTHER SOURCES

Incomes which does not fall under any of the other head will fall under the head of ‘Income from Other Sources'. Some of the examples are like Gift, Interest on Savings or FD, Dividends, etc.

Authored by Adv. Shivam Kumar

"Loved reading this piece by Shivam from Taxblock?
Join CAclubindia's network for Daily Articles, News Updates, Forum Threads, Judgments, Courses for CA/CS/CMA, Professional Courses and MUCH MORE!"




 



Category Income Tax, Other Articles by - Shivam from Taxblock 



Comments


update