Key idea
Salary is not the only thing the tax system watches. Income is grouped into five heads, and it pays to know which of yours are in play.
Indian tax law sorts all income into five categories, called heads. Your total taxable income is the sum across them, minus the deductions you are allowed. For most salaried people only one or two heads matter, but ignoring the others is where filing goes wrong.
The five heads
| Head of income | Typical for a salaried person |
|---|---|
| Salary | Your main income |
| House property | Rent received, or home-loan interest |
| Capital gains | Selling shares, funds, property |
| Business / profession | Freelance or side income |
| Other sources | Bank interest, dividends, FD interest |
The commonly missed one
The head people forget is other sources, especially bank and FD interest. It is taxable even though tax is often not deducted on it, and the department already sees it in your AIS. Leaving it out is the classic filing error.
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