What is the difference between taxable and non-taxable income?
The word income has been defined in all its technicalities in the Income Tax Act, yet the definition is not complete. Broadly speaking, anything that is received by an individual with some amount of regularity can be treated as his income. However, some preliminary distinction needs to be made. For instance, money received from the sale of a house is different from income received as rent from the same house. Generally, rent is income, while gains accruing on account of sale of the house will be capital gains. Both are taxed differently. As for a salaried person, his income includes wages, salary advance, arrears of salary, gratuity, fees, commission, allowances, bonus etc. However, all the income is not taxable. Taxable income is that portion of the income on which one has to pay income tax. How is taxable income computed? This is done after reducing various deductions from the total income. These deductions are specified in the Income Tax Act. Certain rebates are also allowed which a
