FIVE HEADS OF INCOME INCOME UNDER HEAD SALARIES

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Presentation transcript:

FIVE HEADS OF INCOME INCOME UNDER HEAD SALARIES INCOME FROM HOUSE PROPERTY PROFITS AND GAINS OF BUSINESS OR PROFESSIONS CAPITAL GAINS INCOME FROM OTHER SOURCES

INCOME FROM SALARY Income can be charged only if there is an employer employee relationship between the payer and payee. SALARY INCLUDES : Basic salary or wages Any annuity or pension Gratuity Advance of salary Leave encashment Commission Retirement benefits.

GROSS SALARY The aggregate of the above incomes , after exemption available , is known as Gross Salary and this charged under the head income from salary. Basic salary along with commission and bonuses is fully taxable.

ALLOWANCES An allowance is a fixed monetary amount paid by the employer to the employee for expenses related to office work. Allowance are generally included in the salary and taxed unless there are exemption available.

FULLY TAXABLE ALLOWANCE Dearness allowance. City compensatory allowance. Overtime allowance Servant allowance Lunch allowance

House rent allowance (HRA). Leave travel allowance (LTA). EXEMPTED ALLOWANCE Conveyance allowance . House rent allowance (HRA). Leave travel allowance (LTA). Medical allowance

Allowance/Exemption Allowances Exemption Upto Rs 800 per month. On certain calculation. Twice in the block of two year. Upto Rs 15000 per annum is tax free. Conveneyance allowance House rent allowance Leave travel allowance Medical allowance

PERSONAL ADVANTAGES Perquisites are benefits in addition to normal salary to which an employee has a right by way of his employment. Employer gives Form 16 which will contain all the earnings, deduction and exemption available.

INCOME FROM HOUSE PROPERTY Any residential , industrial or commercial property that you own will be taxed as well. Even if your house property is not let out, it will be considered as deemed to be let out and you need to pay tax on it.

PROFITS AND GAINS OF BUSINESS OR PROFESSION Any income earned by any businessman / professionals will be taxable under this head of income The income chargeable to tax is the difference between the credits received on running the business and expenses incurred. Deduction allowed -: Expenses directly related to Business. Depreciation of assets used Rent for premises Insurance Repairs of machinery, furniture Advertisements Travelling etc.

CAPITAL GAINS Any profit or gains arising from transfer of the capital assets held as investment are chargeable to tax under the head “CAPITAL GAINS”.

Capital gains For esample :- Sale of building Sale of land Sale of shares, debentures etc.

INCOME FROM OTHER SOURCES Any income that does not fall under the four heads above is taxed under the head “INCOME FROM OTHER SOURCES”. Certain examples are-: Income from bank deposits Winning from lottery Sum of money exceeding Rs. 50,000.(received from person other than relative) Income from bank interest Income from divident