What are the Heads of Income?

According to the Income Tax Act, there are five heads of income: 1) Income from Salary, 2) Income from House Property, 3) Profits and Gains of Business or Profession, 4) Capital Gains, and 5) Income from Other Sources. Each head has distinct rules for calculation and taxation.

Why is it important to understand the Heads of Income?

Understanding the heads of income helps taxpayers categorize their earnings correctly and claim relevant deductions, ensuring proper tax filing and compliance.

An illustrated diagram explaining the five different heads of income in India for tax classification purposes.

What do you mean by Income?

What do you mean by Income? Describes Different Heads of Income:

Q: What do you mean by Income?

Income refers to the money or value a person or entity earns from various sources such as salary, business, rent, investments, or other activities. It represents the financial gain or return that contributes to one’s wealth or financial position.

What is Income?

The term “income” includes the following:

(a) Any income, receipt, profit, or gain arising or accruing from any source, and any such amount that is related to or derived from that source;

(b) Any amount that is considered or treated as income, or any income or receipt that arises, accrues, or is received in Bangladesh, or any amount that is deemed to arise, accrue, or be accepted in Bangladesh;

(c) Any sum, payment, or transaction on which tax is chargeable under the Income Tax Act;

(d) Any winning or gain from lotteries, which—

· (i) is not of a natural or regular character;

· (ii) is not a result of the taxpayer’s own creation or effort;

· (iii) is not received as compensation or indemnity;

· (iv) is not received through inheritance, will, gift, or trust; and

· (v) is not received as a reward or prize in recognition of service or merit.

Heads of Income:

A taxpayer’s total income is classified under the following seven heads of income:

1. Income from Employment (Salaries)

2. Income from Rent (House Property)

3. Income from Agriculture

4. Income from Business or Profession

5. Capital Gains

6. Income from Financial Assets (e.g., bank interest/profit, dividends, savings certificate profit, securities income, etc.)

7. Income from Other Sources (e.g., royalties, license fees, honoraria, fees, government grants, or other allowances).

What is Total Income?

A taxpayer's total income is determined by aggregating income from all heads mentioned above. The tax payable is then calculated on this total income.

A taxpayer may determine and report his or her total income in the IT-11GA (2023) Return Form under the following structure:

Serial NO.	Statement of Total Income	Amount(TK.)
01	Income from Employment	********
02	Income from Rent	********
03	Income from Agriculture	********
04	Income from Business or Profession	********
05	Capital Gains	********
06	Income from Financial Assets (Bank Interest/Profit, Dividend, Savings Certificate Profit, Securities, etc.)	********
07	Income from Other Sources (Royalty, License Fee, Honorarium, Fees, Government Grants, etc.)	********
08	Share of Income from Firm or Association of Persons	********
09	Income of Minor Child, Spouse (if not a taxpayer)	********
10	Taxable Foreign Income	********
11	Total Income (Sum of 1 to 10)	********

What do you mean by Income? Describes Different Heads of Income

What do you mean by Income? Describes Different Heads of Income:

What is Income?

Heads of Income:

What is Total Income?

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