What is Taxable Income ? Frequently asked questions. In previous article we have given Due Dates For Filing Tax Returns and What is TDS or Tax Deducted at Source. Today we are providing details of what is taxable income and other frequently asked questions. Read below !!
What is Taxable Income ? Frequently asked questions
What does the IT Department consider as income?
The word Income has a very broad and inclusive meaning. In case of a salaried person, all that is received from an employer in cash, kind or as a facility is considered as income. For a businessman, his net profits will constitute income. Income may also flow from investments in the form of Interest, Dividend, and Commission etc. Infect the Income Tax Act does not differentiate between legal and illegal income for purpose of taxation. Under the Act, all incomes earned by persons are classified into 5 different heads, such as:
- Income from Salary
- Income from House property
- Income from Business or Profession
- Income from capital gains
- Income from other sources
Are all receipts considered as income?
No. Receipts can be classified into two kinds.
A) Revenue receipt
B) Capital receipt.
The general rule under the Income tax Act is that, all revenue receipt are taxable unless a receipt is specifically exempted and all capital receipts are exempt from taxation unless there is a provision to tax it. Gifts and loans etc are in the nature of capital receipts not attracting tax.
No. The dividend declared by Indian companies is not taxable in the hands of the share holders because tax on distributed profits have already been borne by the company.
I am an agriculturist. Is my income taxable?
Your agricultural income is not taxable per se. However, if you have any other source of income like income from investments, property etc, while calculating tax on them, your agricultural income will be taken into account, so that you pay tax at a higher rate on that other income.
What is agricultural income?
To consider an activity as agriculture the basic operation such as tilling, sowing, irrigating & harvesting should have been carried out. Thereafter what is sold in the market should be the primary product harvested. Receipt from such sale is considered as agricultural receipt. If however some further processing or modification were done to the harvested product to enhance its marketable value then such enhanced value would be considered as business income.
Do I have to maintain any records or proof of earnings?
For every source of income you have to maintain proof of earning and the records specified under the IT Act. In case, no such records have been laid down, you should maintain reasonable level of records with which you can support the claim of income.
Is prize money won in a lottery or competition taxable?
Yes. You have to pay taxes on the prize money earned in lottery or competition.
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Content in this Article
- What is Taxable Income ? Frequently asked questions
- Are all receipts considered as income?
- Is dividend received from shares hold in portfolio taxable?
- I am an agriculturist. Is my income taxable?
- What is agricultural income?
- Do I have to maintain any records or proof of earnings?
- Is prize money won in a lottery or competition taxable?