The following factors need to be taken into consideration for the computation of total income:
(i) Residential status: This will determine what kinds of income of an assessee are taxable in India. It is important to remember that residential status is different from citizenship, and that it has to be determined separately for every assessment year.
(ii) Heads of Income: There are five heads under which any income of an assessee is classified. They are:
• Income from Salaries
• Income from House Property
• Profits and Gains from Business or Profession
• Capital Gains
• Income from Other Sources
Within each head of income, certain deductions have been given. Income under each head is to be computed separately taking into account the specific provisions.
(iii) Deductions from total income: The Act allows certain deductions on account of certain payments like investments, insurance premia, school fees, etc. (These are loosely referred to as tax saving investments.) These are also to be considered for computing tax payable.
(iv) Apart from the above, it is important to take note of the following points:
• There are certain incomes which are totally exempt from tax. These are contained in section 10.
• An assessee may be assessable for certain other persons’ incomes, e.g minor child, spouse, etc.
• Some losses are eligible for being set off against income in subsequent years. You may take advantage of these provisions.







September 12, 2009 at 4:20 pm
which income is extempt from income tax under section 10. I am a widow and have no income except interest on fixed deposit
July 9, 2012 at 11:11 pm
hello mam,
interest income from fixed deposit is covered under income from other source and u have to pay tax on remaining interes as per the slab rate
July 9, 2012 at 11:57 pm
Yes. You are correct!!
November 15, 2011 at 12:03 am
send income tax related message
June 5, 2012 at 4:01 am
Actually I am staying in hostel and paying Rs.5000/month. Is there any possibility to apply for HRA in order to get tax exemption. Please reply soon.
June 5, 2012 at 9:33 am
Hello Mala,
Yes. You can show your hostel fees for the HRA excemption.
Thanks,
Krishna