Income tax calculator: Segregating income in these 5 heads can simplify your job
Income tax calculator: While filing income tax return (ITR), it’s important for the taxpayer to know the various categories of income segregated by the income tax department. As per the income tax act 1961, one’s income is divided into 5 categories — income from Salary, income from house property, income from business profit, income from investments/capital assets and income from other sources. According to tax and investment experts, an earning individual can earn in various ways but Section 14 of the Income Tax Act 1961 stipulates these incomes in these 5 categories. So, a taxpayer is advised to divide one’s income in these 5 categories for simplifying its job during ITR filing.
Speaking on how income tax department categorises a taxpayers income SEBI registered tax and investment expert Jitendra Solanki said, “As per the Section 14 of the Income Tax Act 1961, an individual can earn from various ways but finally it would fall in five categories — income from salary, income from house property, income from profit in business, income from investments or capital assets and income from other sources.”
The SEBI registered tax and investment expert went on to add that it’s not necessary that each earning individual will have income from all these 5 categories but dividing one’s income on the basis of these 5 categories would make ITR filing more easier as calculating income tax from various heads would become little easier in comparison to finding all income at once and calculating how much income tax will accrue on them.
1] Income from Salary
On what does income from salary means; Manikaran Singhal, Founder at goodmoneying.com said, “One’s income from fees wages, advances, allowances, pension, gratuity and retirement benefits all come under the income from salary category.”
2] Income from house property
On income from house property Singhal said, “Sections 22 to 27 of the Income Tax Act 1961 mentions that one’s income from house property or land or from both falls under income from house property category.”
3] Income from profit in business
If someone is indulged in business then one’s income from this business will be calculated under this category.
4] Income from investments/capital assets
An earning individual makes investments too. So, the income from one’s investment or from the capital assets will fall under this category.
5] Income from other sources
Any income that doesn’t fall in above four categories will come under this category. One’s income from gambling, Cryptocurrency investment, etc. will fall under this income from other source category.
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