HEADS OF INCOME

A individual may also earn and get hold of profits from distinct reassets at some point of the tax year. For the motive of fee of profits tax and calculation of tax payable, the profits is assessed below 5 heads. These heads of profits were laid out in phase eleven of the Income Tax Ordinance, 2001, and are as follows.

(a) Salary,

(b) Income from residence property;

(c) Income from enterprise or profession;

(d) Capital gains, and

(e) Income from different reassets.

Each and each profits earned through the individual may be labeled in this sort of heads. The presence of the 5th head this is profits from different reassets` makes it positive that any profits which can’t be protected in any of the primary 4 heads should be taxed below this wellknown head.

Classification of profits of the individual below 5 distinct heads does now no longer imply that someone will should pay 5 distinct taxes. Classification is simplest essential due to the fact the process followed for computation of profits below every head is distinct. It is essential on humanitarian, logical and justice grounds to adapt distinct ideas and bases for computing the taxable profits below every head. Once the profits has been calculated one at a time in keeping Dfa Ho with the process unique for every head, it’s miles clubbed collectively and the evaluation of the entire profits is made on the equal time and tax is computed at the taxable profits and now no longer on profits below every head one at a time