Heads of Income: Income from Salary, House property, Business and Profession, Capital Gain and other sources

Think of four people you know. A software engineer in Navi Mumbai with a monthly salary. An aunt who lets out a flat in Thane. A trader at Crawford Market. A relative who sold a plot of land in Panvel at a profit. They all earn income, yet the Income-tax Act refuses to treat their money as one pile. It sorts each person’s income into five heads, and the rules for working out the profit differ from head to head. Why sort at all, and what goes where?

In two minutes

The Income-tax Act classifies all income into five heads (salary, income from house property, profits and gains of business or profession, capital gains, and income from other sources), and each head has its own rules for what counts as income and what may be deducted before the net figure is reached.

The rest of this chapter

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