The rules of income tax group income into different classes and decide under what principles different types can be taxed in respect of their source and their nature. Of very common types of
• Income taxable, the following are mentioned: Salaries and Wages: This is generally the chief source of income for most people. Salaries are thus normally taxed through TDS as employers pay the salaries.
• Business or Professional Income: Tax is levied on the earnings of self-employed professionals and business people after deducting permissible business expenses.
• Capital Gains: Such incomes realized from assets sold constitute capital gains, either short-term or long-term depending on how long an asset had been held. Thus, the tax rates differ with the nature of capital gain.