As per Section 14 of the Income Tax Act, for the purpose of charging of tax and computation of total income, all incomes are classified under the following
1. Income from Salary :
Income for salary include wages, pension, annuity, gratuity, fees, commission, profits, leave encashment, annual accretion and transferred balance in recognised Provident Fund (PF) and contribution to employees pension account.
2. Income From House Properties (i.e House Rent)
Rental Income from properties owned by a person other than those which are occupied by him is charged as income from house property. If the property is vacant then a notional income is included under this head.
3. Income From Business & Profession
Income from business or profession includes profit/loss from a business entity or a profession, any interest, salary or bonus to a partner of a firm.
4. Income from capital gains
Income from capital gains includes long term capital gains (LTCG) and short term capital gains (STCG) on sale of any capital assets.
5. Income from other sources
Income from other sources includes interest on bank deposits and securities, dividend, royalty income, winning on lotteries and races and gifts received among others.
The total income under all these 5 heads of Income is then added and disclosed in the Income Tax Return. The tax on the total taxable income (after allowing deductions) is then calculated as the Income Tax Slab Rates of the taxpayer.