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The Income-tax Act, 1961 is the charging Statute of Income Tax in India. It provides for levy, administration, collection and recovery of Income Tax. The Government of India brought a draft statute called the “Direct Taxes Code” intended to replace the Income Tax Act,1961 and the Wealth Tax Act, 1957.
Everyone who earns or gets an income in India is subject to income tax. (Yes, Indians living abroad too). Also read our article on Income Tax for NRIs.Your income could be salary, pension or could be from a savings account that’s quietly accumulating a 4% interest. Even, winners of ‘Kaun Banega Crorepati’ have to pay tax on their prize money.
For simpler classification, the Income Tax Department breaks down income into five heads:
|Income from Salary||Income from salary and pension are covered under here|
|Income from House Property||This is rental income mostly|
|Income from Capital Gains||Income from sale of a capital asset such as mutual funds, shares, house property, agricultural land|
|Income from Business and Profession||This is when you are self-employed, work as a freelancer or contractor, or you run a business. Life insurance agents, doctors and lawyers who have their own practice, tuition teachers,|
|Income from Other Sources||Income from savings bank account interest, fixed deposits, winning KBC|
Get a free consultation for Income Tax with Filling and Compliance (Scrutiny) and Business Setup in India by Scheduling an appointment with an Adhimukti Associates Advisor.
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