Source of Income Vs Head of Income
Source of Income:
The source of income and the head of income both are two different concepts use in the computation of income tax for filling the Income Tax Return.
The source of income refers to the origin or the place from where the income is earn
For example, salary income is earned from an employer, business income is earned from a business, rental income is earned from a property, etc.
The source of income is use to determine the taxability of income under the Income Tax Act, as different sources of income may be subject to different tax rules and rates.
Head of Income:
But the head of income refers to the specific category or classification of income under which the income is tax.
There are five categories or heads of income under the Income Tax Act, which include:
- Salary
- House Property
- Business or Profession
- Capital Gains, and
- Income from Other Sources.
Each head of income has its own set of rules for calculating taxable income, allowable deductions, exemptions, and tax rates.
In summary, the source of income refers to the origin or place from where the income is earn, while the head of income refers to the specific category or classification of income under which the income is taxed.
Understanding the source and head of income is important for correctly computing and filing income tax returns.
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For more information visit this site: https://www.incometax.gov.in
