5 HEADS OF INCOME PPT.pptx

PPT ON 5 HEADS OF INCOME WHICH INCLUDES THE OVERVIEW OF ALL THE HEADS OF INCOME

1. 5 HEADS OF INCOME PRESENTED BY TANISHKA JAIN

2. INTRODUCTION As per the Section 14 Income Tax Act,1961, there are five main income tax heads for an individual. The computation of income tax is an important part and has to be calculated according to the income of a person. The government has classified the sources of income under separate heads and then the income tax is computed accordingly. The provisions and rules are according to the details mentioned in the Income Tax Act 1961.

3. FIVE MAIN HEADS OF INCOME Income from Salary Income from House Property Income from Business Income from Capital Gains Income from Other Sources

4. INCOME FROM SALARY The first head of Income Tax heads is income from salary . This clause essentially assimilates any remuneration, which is received by an individual in terms of services provided by him based on a contract of employment. This amount qualifies to be considered for income tax only if there is an employer-employee relationship between the payer and the payee respectively. Salary also should include the basic wages or salary, advance salary, pension, commission, gratuity, perquisites as well as the annual bonus.

5. INCOME FROM HOUSE PRORERTY The second head of Income Tax heads is Income from house property, According to the Income Tax Act 1961, Sections 22 to 27 is dedicated to the provisions for the computation of the total standard income of a person from the house property or land that he or she owns. An interesting aspect is that the charge is derived out of the property or land and not on the amount of rent received.

6. INCOME FROM BUSINESS AND PROFESSION “Profit and gains of business or profession” is one of the heads of income under the Income Tax Act. Business profits is the third head of income under the Act, after salaries and house property income. This head is used to classify or aggregate income which the taxpayer generates through business or professional activities. While filing an income tax return, the taxpayer must declare the amount of profits and gains of business or profession in case the assessee is having any such income .

7. INCOME FROM CAPITAL GAINS Capital gains refer to any profit or gain that arises from the sale of a capital asset. This gain or profit is charged to tax in the year in which the transfer of the capital asset takes place. When there is a transfer (sale, exchange, relinquishment, extinguishment, compulsory acquisition, conversion, maturity, redemption, etc ) of a capital asset then capital gains are charged to income tax. Also, if an inherited asset is sold by the person who inherits it, capital gains tax will be applicable.

8. INCOME FROM OTHER SOURCES Any income that is not covered in the other remaining four heads of income is taxed under income from other sources. It is referred to as residuary head of income. Incomes excluded from salary, house property, business & profession (PGBP) or capital gains are covered in Income from Other Sources, barring incomes that are exempt under the Income Tax Act.