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  • Category: Exam Questions

    About Income tax from salary

    Have a query about income tax? Wondering which income is considered for calculating income tax? Check out financial advice from experts on this page.

    What are the different types of income considered in income tax? What is meant by residential, ordinary residential, non ordinary residential in income tax? Is income from agriculture exempted when the income is earned in India by agriculture?
    Awaiting response.
  • Answers

    4 Answers found.
  • Any type of income is taxable except agricultural income. Whether you are salaried or self employed person, you have to pay tax as per the prescribed income tax slab. Non salary income consists of income from interest on principal amount given to others, share or bullion market, land, house rent or any type of income which is non agricultural is bound to be taxable.

    Dr. Paresh B. Gujarati.
    Mechanical Engineer.
    'I'mprovement always begins with 'I'.

  • Every type of income is taxable. And you pay for the income tax on the transactions and the total income earned at the end of the month. You need to pay the taxes in time to avoid the legal issues.

    Agriculture income is not taxable. As the status of agriculture is considered as social service, it is tax deductible in all forms. However agriculture business does pay the taxes indirectly for example during the sales of the products in the market and also during making big transactions in bank. But the income earned through the agriculture service is tax deductible.

    As for the residential, non residential income tax, you can read more about it here :

  • Any salary earned through any public - undertaking, central - government, state - governments or state government public undertaking or any registered company take care of income - tax deduction of all the employees covered within the tax- range and any deduction made being inappropriate or otherwise has to be declared by the employee concerned in the income tax - return file normally submitted in the month of July of the next year.
    Similarly all the incomes made by other professionals such as Doctors, Lawyers, Traders etc pay their income - tax by filling up the proper income - tax form.
    However agricultural income is exempted from the net of income - tax but by selling the crops to any business - firm, the farmers have to pay the tax as per provision of income - tax rule.

  • Hi,
    Different type of income considered for income tax are-
    a) Income from salary,
    b) Income from property, for example income from house rent,
    c) Profits earned in business and profession,
    d) Capital earning and
    e) Earnings from other sources.

    Your next query is regarding the residential status of tax payers. Tax payers are classified into three categories i.e.
    1) Residential and ordinary residential,
    2) Residential but non ordinary residential and
    3) Non residential.
    Residential status is allotted to a person other than individual. Type of person may be Hindu Undivided Family ( HUF ), Firm, Association of persons, Indian company, Foreign company and any other person other than individual.
    HUF residential status categorization-
    a) If taxpayers business affairs are wholly in India then it is residential,
    b) If taxpayers business affairs are wholly outside India then it is non-residential and
    c) If taxpayers business affairs are partly in India and partly outside India then also it comes under residential status.
    For all type of person categorization is same as in case of Hindu Undivided Family except Indian company and foreign company. for Indian company status is only residential whether taxpayers business affairs are in India or outside India wholly or partly.
    Foreign company business affairs are in India the it is considered in residential status. otherwise it is non residential. Income earned India is always taxable in India not withstanding with residential category and income earned outside India is not taxable for non residential Indian. If a person is resident but not ordinary resident then his income is taxable only if his business affairs are in India wholly or partly.
    Your last query whether income from agriculture is exempted from income tax. Income from agriculture is exempted from income tax but in few cases income from agriculture is considered partly a business affairs. For example growing and manufacturing tea in India is partly agricultural income and partly business. Same is the case with many more products like coffee and rubber etc.

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