Income tax return: 10 categories of income that must be declared

When submitting an income tax return, taxpayers are required to declare income and expenditure under various heads. Under the Income Tax Act, a total of 10 categories of income must be disclosed.

This does not mean that a taxpayer must have income from all 10 categories; rather, income should be declared only under the relevant category or categories from which it is derived.

In essence, there are 10 types of taxable income. The National Board of Revenue (NBR) has classified a taxpayer’s total income into 10 categories in the income tax return form.

In accordance with Form IT-11c (2023), a taxpayer may determine category-wise income details and calculate total income for the return.

After two extensions, the deadline for submission of the annual income tax return will expire on 31 January.

This year, all taxpayers are required to submit their returns online. However, supporting documents relating to income do not need to be uploaded online.

Below are the 10 categories of income on the basis of which a taxpayer’s total income is determined:

Income received from employment in government, private, or any other organisation falls under this category. This includes basic salary, allowances, bonuses, incentives and all other forms of employment related income.

This includes income earned from renting out houses, apartments, shops, or any other property. The total rental income for the entire year must be declared together in the return.

Income derived from commercial agricultural activities must be declared. This includes income from agricultural land, crops, fruits, vegetables, livestock farming, or any other agricultural activity.

Income earned from sole proprietorship businesses must be declared under this category. In addition, income earned by professionals such as physicians, lawyers, and consultants is also included here.

Income earned from employment or consultancy services abroad must be declared. Furthermore, any taxable income derived from overseas investments or assets must also be included under this category.

Income earned from capital assets, including profits, rent, royalties, interest, or any other form of capital-based income, falls under this category.

Income such as bank interest or profit, dividends, returns from savings certificates, and income from treasury bonds or securities must be declared in the income tax return.

Income received during the year as a member of a partnership firm or an association of persons must be declared under this category.

If any family member is not a taxpayer and their income is required to be aggregated with that of the taxpayer, the relevant portion of such income must be declared under this category.

This includes income from royalties, licence fees, honoraria, professional fees, government cash subsidies or any other miscellaneous or irregular sources of income.