Question

What are the main source of income tax? ​

Answer 1

There are 5 sources stipulated under the Income Tax Act, 1961, like salary, business or profession, house property, capital gains and other sources. While the nature of income is quite evident for the four sources of income, income under other sources consists of income from residual sources

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Answer 2

Answer:

The Income Tax Department classifies income into five categories for streamlining the process of income tax reporting. They are:

Income from Salary

Income from House Property

Income from Capital Gains/Loss

Income from Business and Profession

Income from Other Sources

Therefore, ‘Income from Other Sources’ can be defined as income that is not included in any of the other listed categories. Besides, there are certain other incomes that are always taxed under this category.

Explanation:

1. Section 56(2)(i) of the Income Tax Act, 1961 mentions that dividends will always be taxed under this category. However, dividends from companies based in India, except those covered by Section 2(22)(e), are exempt from tax under Section 10(34).

2.Income from horse races, gambling, betting, lotteries, crossword puzzles are taxable at a rate of 30% under this head.

3.Income in the form of interest gained from compensation or from enhanced compensation is taxable under this category. However, 50% of such income is liable for a deduction

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