The Black’ Law Dictionary defines tax as “any contribution imposed by government upon individuals, for the use and service of the state, whether under the name of toll, tribute, tallage, gabel, impost, duty, custom, excise, subsidy, aid, supply, or other name.” Since it is an enforced contribution and not a voluntary payment or donation, anyone who fails to pay the amount within the stipulated time period is subjected to punishment. Hence, the months from January to April are the most hectic months in the life of taxpayers as they scramble to file income tax returns.

 

In India income tax return is filed based on the income earned from five sources namely

 

1. Income from Salary

 

It refers to remuneration in any form received by an employee from employer. Salary can be anything such as wages, bonus, gratuity, dearness allowance, pension, advance of salary, and so on.

 

2. Income from House Property

 

It refers to the income obtained from buildings or/and lands.

 

3.

Income from Business or Profession

 

As per the Income Tax Act, business refers to trade, commerce, and manufacture. Besides, any adventure or concern with respect to trade, commerce or manufacture is also considered as business. As for profession, it refers to any activity that requires intellectual or manual skill such as doctors, engineers, lawyers, artists, singers, and musicians.

 

4. Income from Capital Gains

 

Capital gains refer to any profit or gains resulting from the transfer of capital assets. As per the Income Tax Act, a capital asset is “a property of any kind held by an assessed such as real estate, equity shares, bonds, jeweler, etc.” Transfer refers to transactions in any form such as sale, relinquishment of asset, exchange, extinguishment of rights in an asset and so on.

 

5. Income from Other Sources

 

Those incomes that cannot be included in the above categories come under this section. This includes income by way of dividends, income from winning races, lotteries, or games, interests on securities, bank deposits, or loans, gifts and income from letting of furniture, machinery, building, or plant.

 

Though it looks easy and simple, filing of tax returns is not as easy as it sounds. There are various sections and subsections in the Income Tax Act, which makes tax filing a tedious process. Moreover, any inaccuracies can land one in trouble. Hence, seeking tax-planning services from reputed consulting companies is the best way to handle the pressure, and tension involved with tax filing.