COMPUTATION OF TOTAL INCOME... For the purpose of computing total income and charging tax thereon, income from various sources is classified under the following heads: A. Salaries B. Income from House Property C. Profits and Gains of business or profession D. Capital Gains E. Income from Other Sources These five heads of income are mutually exclusive. If any income falls under one head, it cannot be considered under any other head. Income under each head has to be computed as per the provisions under that head. Then, subject to provisions of set off of losses between the heads of income, the income under various heads has to be added to arrive at a gross total income. From this gross total income, deductions under Chapter VIA are to be allowed to arrive at the total income. On this total income tax is calculated at the rates specified in the relevant Finance Act or the rates given in the Income Tax Act itself [as in the case of long term capital gains]. From this tax, rebates and reliefs, if any, allowable under Chapter VIII are allowed to arrive at the total tax payable by the assessee. The above procedure is summarized below: Gross Total Income = A + B + C + D + E Total Income = Gross Total Income — Deductions under chapter VIA Total Tax Payable = Tax on Total Income — Rebates and reliefs under Chapter VIII *****mg*****
Posted on: Fri, 07 Mar 2014 04:30:00 +0000
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