Section 14Income Headswas Section 14 in IT Act 1961

Heads of Income

Total income is classified under five heads: (A) Salaries, (B) Income from House Property, (C) Profits and Gains of Business or Profession, (D) Capital Gains, and (E) Income from Other Sources.

Who this applies to

Every taxpayer — all income must be classified into one of these five heads.

Key Points

Income cannot be taxed under more than one head — it must fall under the most specific head.
Each head has its own computation rules, allowed deductions, and loss set-off restrictions.
Losses from one head can generally be set off against gains from another head, with important exceptions (e.g., capital gains losses can only be set off against capital gains).
After computing income under each head, all five are added to arrive at Gross Total Income.

Worked Example

Salaried employee with multiple income streams

Scenario

Priya earns a salary, has a rented flat, received dividends and FD interest, and sold mutual fund units. How is her income classified?

Calculation

Head A – Salaries: ₹15,00,000 gross salary
Head B – House Property: ₹2,40,000 net rental income (after interest deduction)
Head C – PGBP: Nil (no business)
Head D – Capital Gains: ₹80,000 LTCG on equity MF units
Head E – Other Sources: ₹50,000 (dividends ₹30K + FD interest ₹20K)

Gross Total Income = 15,00,000 + 2,40,000 + 80,000 + 50,000 = ₹17,70,000

Result

Each head is computed separately before they are summed. Priya can claim deductions (like standard deduction from salary) before arriving at Total Income.

Related Sections

Section 15Salaries — Charging Section

Section 20House Property — Charging Section

Section 196STCG on Listed Equity (STT paid) — 20%

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Section references are based on the Income Tax Act 2025 (Tax Year 2026-27). Examples are illustrative — verify with a Chartered Accountant before filing.