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Know about Taxable Income

Know about Taxable Income

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.

Is dividend received from shares hold in portfolio taxable?

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.

Know about Taxable Income

FEMA provisions for Resident and Non Resident Individuals

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