Income tax is the tax levied by the government on an individual’s income. This term individual here applies to a person, Hindu Undivided Family, company, co-operative societies and trusts. And, the tax slabs are decided based on one’s income and age.
Now, taxable income is income of an individual minus the tax exemptions, deductions and rebate .
Income on which Tax is Paid
- Income from Salary - Salary, Allowances, Leave encashment, etc.
- Income from House Property - Income from house or building. This may be owned and self-occupied or rented out.
- Income from Capital Gain - Income from gain or loss when a capital asset is sold.
- Income from Business or Profession - Income/loss arising out of carrying on a business or profession.
- Income from Other Sources - This is the residual head - includes income from savings bank accounts, family pension, fixed deposits or gifts received.
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