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Income Tax Basics

Basics of Income Tax in India

Taxes form a major source of revenue for the Government. These are of two types:

a) Direct Tax
b) Indirect Tax

Direct Tax

Direct taxes like income-tax, wealth-tax, expenditure-tax etc are those whose burden falls directly on the taxpayer. Click Here for details.

Indirect Tax

Indirect taxes like excise duty, customs duty, service tax, sales tax, etc form the cluster of indirect taxes. Click Here for details.

Types of Income

Income tax is a tax on all incomes received, or accruing, or arising to a tax payer during a previous year. Incomes from various sources are computed under five different heads as:

1. Salary : includes allowances, value of perquisites, profits in lieu of salary and pension.

2. House Property : whether residential or commercial, self occupied or rented.

3. Profits and gains : from business or profession
4. Capital gains

5. Income from other sources: includes bank interest, interest on securities, lotteries, crossword puzzles, races, games, gifts from unrelated persons exceeding the specified limit etc.

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