2 mins Read | 2 Years Ago

Segregating Income under these five income heads, can simplify the ITR filing process.

Segregating Income under these five income heads, can simplify the ITR filing process.

Income Tax Calculator: Segregating Income under these five income heads, can simplify the ITR filing process.

The income of taxpayers is segregated under five income heads. Read on to know more about these five income categories, and make ITR filing easy.

Income can come from multiple sources. These sources are segregated into different categories by the Income Tax Department, also known as income heads. ICICI Bank’s Income Tax calculator can help you calculate the payable tax, based on these income heads. There are five income heads that taxpayers need to understand, before filing for ITR.

Here are the five income heads:

  • Income from Salary

  • Profits and Gains of Business or Profession

  • Income from House Property

  • Income from Capital Gains

  • Income from Other Sources.

Income from Salary

If an employee is being paid for their services by the employer, the income earned will be taxed under this head. This income may be salary, pension, annuity, etc.

The total amount of income after removing the exemptions, if any, will be considered for chargeability under this income head. Basic salaries, bonuses, commissions, and allowances will be taxed under this head.

Allowances are an amount of money given along with the salary to an employee, for the services they provide, like leave travel allowances, conveyance allowance, etc. Then there are some allowances that are exempt from tax.

Profits and Gains from your Business or Profession

Income from trade, profession, commerce, or manufacturing is taxed under this income head. The profit is calculated after deducting the allowable expenses from the revenues.

Income will be offered under this head, subject to the following conditions:

  • Businesses or professions need to be in place, for the income to be taxed.

  • The operations of the business or profession should be handled by the taxpayer.

  • The business or profession should be carried out during the relevant financial year.

Income from House Property

Under this income head, different provisions are counted for calculating the income of individuals that own a property or land.

If the individual earns an income by giving their property out on rent, it will be taxed under this head. Also, while calculating tax under this head, the taxpayer can claim tax deductions on the interest paid on a Home Loan.

The income from a house property will be taxed if it meets the following conditions:

  • The house property consists of a building, house, or any land appurtenant

  • The taxpayer is the owner of the house property

  • The house property must be used for residential purposes. It should not be used by the taxpayer for any professional or business purposes.

Income from Capital Gains

Profits or gains earned from selling capital assets that are held as investments, are considered capital gains, House property, stocks, mutual funds, etc. are taxed under this head.

Income from Other Sources

Income that do not fall under any other head, is taxable under this income head. Some examples are, dividend income, interest earned from bank deposits, etc.

Final word:

Calculating income tax, can be quite stressful and time consuming. Using an Income Tax Calculator can ease the process and save time, effort and money. You can simply calculate your income with this digital tool by providing some basic information, and pay your taxes online. Click on the below link to get a list of calculators, and calculate your taxes online.

“The user needs to verify all the facts, law and contents with the text of the prevailing statutes and seek appropriate professional advice before acting on the basis of any information contained herein, as the taxation implications may vary depending upon the facts in each case/interpretation by tax authorities, and the tax laws are subject to change from time to time. ICICI Bank Ltd expressly disclaims any liability to any person, in respect of anything done or omitted to be done by any such person, by placing reliance upon the contents of this write-up.”

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