5 HEADS OF INCOME

Income is categorized into 5 major heads:

  1. INCOME FROM SALARIES- [Salary from job]
  2. INCOME FROM HOUSE PROPERTY  -[Income from house like Rent]
  3. PROFITS AND GAINS OF BUSINESS AND PROFESSIONS  -[Business Income also caled PGBP Income]
  4. INCOME FROM CAPITAL GAINS- [Profit from sale of Assets like Property]
  5. INCOME FROM OTHER SOURCES- [All other type of Income like Interest or Dividend]

Hence those income which are not falling under any other heads are taxable under Income from Other Sources

All these combine to form Gross Total Income as shown below :_

Particulars Amt
Income from Salaries xx
Income from House Property xx
Profits and Gains of Business and Profession xx
Income from Capital Gains xx
Income from Other Sources xx
Gross Total Income xx

 

Example

Q1

Suppose a person is in Job.He Receives Taxable Salary Income of 300000

He also received bank interest of 2000

What is his Gross Total Income?

Answer

Particulars Amt
Income from Salaries 300000
Income from House Property  
Profits and Gains of Business and Profession  
Income from Capital Gains  
Income from Other Sources 2000
Gross Total Income 302000

 

Q2

Suppose a person has Taxable Rental Income of house 500000

He also has FD in Bank of 100000 on which he receives interest income of 2000

What is his Gross Total Income

Answer

Particulars Amt
Income from Salaries  
Income from House Property 500000
Profits and Gains of Business and Profession  
Income from Capital Gains  
Income from Other Sources 2000
Gross Total Income 502000

 

Q3

Suppose a person is a Shopkeeper

His Sales is 500000,his expenses are 400000

What is his Profit

Also what is his Gross Total income

Answer

Particulars Amt
Income from Salaries  
Income from House Property  
Profits and Gains of Business and Profession 100000
Income from Capital Gains  
Income from Other Sources  
Gross Total Income 100000

 

Q4

Suppose a person is a Shopkeeper

His Sales is 500000,his expenses are 520000

What is his Profit?

Also what is his Gross Total income

Answer

Particulars Amt
Income from Salaries  
Income from House Property  
Profits and Gains of Business and Profession -200000
Income from Capital Gains  
Income from Other Sources  
Gross Total Income -200000

 

Q5

A person purchase property for investment for 5000000

He sells it for 6000000

This Income is taxable under which head?

What is his Gross Total Income

Answer

Particulars Amt
Income from Salaries  
Income from House Property  
Profits and Gains of Business and Profession  
Income from Capital Gains 1000000
Income from Other Sources  
Gross Total Income 1000000

 

Q6

A builder purchase property for sale for 5000000

He sells it for 6000000

This Income is taxable under which head?

What is his Gross Total Income

Answer

Particulars Amt
Income from Salaries  
Income from House Property  
Profits and Gains of Business and Profession 1000000
Income from Capital Gains  
Income from Other Sources  
Gross Total Income 1000000

 

 

 

  1. Taxation for CA, CS, CMA Exams May - June 2019
  2. Income Tax

About the Author

CA Maninder Singh's photo - Expert in Practical Accounts, Taxation and Efiling
CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 10 years. He also provides Accounts Tax GST Training in Delhi and Pune.