Are Gifts Taxed Under any of These Bonds?

Gifts are taxed under other sources. Tax on gifts applies if the amount goes beyond the limit of Rs. 50,000 (with the exception for relatives). In the case of an NRI, gifts received from abroad may also be scrutinized.

Can an NRI Claim a Deduction for Rental Loss From House Property?

Yes, losses from house property can be carried forward for up to eight years if you file the return on time. However, this is limited to set-offs according to the taxation rules for NRIs.

When Should I Report Foreign Income?

Foreign income, such as pensions or salaries, is not liable to taxation in India for an NRI. It is excluded from these five heads unless the taxpayer is a resident. In such cases, the global income is reportable.

NRI Income Tax & Compliance

What are the 5 Heads of Income Tax?

By Ritesh Jain |Last Updated: December 4, 2025

A taxpayer's income is divided into five heads of income as per the Income Tax Act. For accurate calculation of taxes, you must classify your earnings correctly under these five income heads at the end of each financial year. It becomes important for you to understand which earnings belong to which head of income. This blog will give you a clear overview of the five heads of income.

According to Section 14 of the Income Tax Act, 1961, every income subject to taxation under the Income Tax Act, and for calculating the total income, must be classified under the following five heads:

Ritesh Jain(Tax Expert)

Mr. Ritesh has 20 years of experience in taxation, accounting, business planning, organizational structuring, international trade financing, acquisitions, legal and secretarial services, MIS development, and a host of other areas. Mr Jain is a powerhouse of all things taxation.

Frequently Asked Questions

The five heads under which income in India is taxed are: Salary, House property, Business or profession, Capital gains, Any other sources.

Rental income from Indian property is taxed under house property. NRIs must determine long-term/short-term capital gains tax and report rental earnings with the applicable rate of TDS.

Bank interest, bond coupons, and dividends incomes falls under other sources. Additionally, an NRI will face higher rates of TDS, often under Section 195.

Gains from selling an asset (share, real estate, mutual fund) are taxed under Capital gains with separate short-term and long-term regimes depending on the holding period.

Yes, income earned as a freelancer, consultant, or business is taxable and will be reported under the profit and gains of business or profession. An NRI has to submit PAN/TRC in order to claim the applicable DTAA rates.

What are the 5 Heads of Income Tax?

Frequently Asked Questions

What are the Five Heads of Income for Indian Tax Purposes?

How is Rental Income Taxed for NRIs?

Where do Bank Interest and Bond Income Fall?

How are Capital Gains Calculated?

Is Freelancer or Professional Income Taxable in India?

What are the 5 Heads of Income Tax?

Frequently Asked Questions

What are the Five Heads of Income for Indian Tax Purposes?

How is Rental Income Taxed for NRIs?

Where do Bank Interest and Bond Income Fall?

How are Capital Gains Calculated?

Is Freelancer or Professional Income Taxable in India?