Friday, December 26, 2008

Income and its type

Income tax law 1961 defines the term income . According to law , " Income is receipt of money from any resource . For living every person does any work and get some money from his work . That money is called income .

Types of Income

Income tax law divides income into five major parts :-

1. Salary Income

If a person is a employee or worker in any factory , school or govt or private institute , he gets remuneration or wages . This amount is called salary. Both employees and labourer includes in this category. Law sees only the amount how much the employee get after the limit of exemption , it is the duty of employee to pay the tax out of his salary income .

2. Rent Income or income from houses

If a person have more than one houses and gets rent income , then it is the main type of income in the eye of law and it will include in the clubbing of total income .

3. Income from business or profession

If a person has own business or profession and gets profit from this . After deducting all allowable expenses from this profit , the net profit is a type of income and it includes in the taxable total income of assessee .

4. Capital Gain

If any person have some short term or long term capital in the form of shares , bonds , debentures , and other securities . If he sells it and get gain then this is the main type of his income .

5. Other income

If any person gets any income other than above type then it will include in other income . AdSense income is in the form of other income . If a person gets income from lottery then this is also other income . All other income also include in total income .

See Also
Source of Income Tax Law


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