Section 13
Section 13: the five heads of income
Section 13 is short but foundational - it lays down the five categories, or "heads," under which every rupee of a taxpayer's income must be classified before tax can be computed. Nearly every other computation provision in the Act (Chapter IV onward) is organised around one of these five heads.
This explanation is AI-assisted and pending review by our CA/CS team. It is general information, not professional advice - always cross-check against the bare law text above or talk to our tax team for guidance specific to your situation.
What the section says
"Save as otherwise provided in this Act, all incomes shall, for the purposes of charge of income-tax and computation of total income, be classified under the following heads of income."
- Salaries
- Income from house property
- Profits and gains of business or profession
- Capital gains
- Income from other sources
Why this classification matters
Each head has its own computation rules, its own allowable deductions, and in some cases its own rate of tax (for example, capital gains are frequently taxed at special rates rather than the normal slab rates). Which head a particular receipt falls under can materially change how much tax is payable on it - the same amount of money can be taxed very differently depending on whether it's classified as, say, business income or capital gains.
Section 13 itself doesn't define or compute anything - it simply sets up the five-way classification that Chapter IV (Computation of Total Income) then works through head by head: Salaries (Sections 15-19), Income from House Property (Sections 20-25), Profits and Gains of Business or Profession (Sections 26-65), Capital Gains (Sections 67-91), and Income from Other Sources (Sections 92-95).
"Income from Other Sources" functions as the residual head - income that doesn't fit any of the first four heads is taxed under this one, so in principle every kind of taxable receipt has a head it belongs to.
Frequently asked questions
What are the five heads of income under the Income-tax Act, 2025?
Salaries; Income from house property; Profits and gains of business or profession; Capital gains; and Income from other sources.
Why does it matter which head my income falls under?
Each head has its own rules for computing taxable income, its own allowable deductions, and sometimes its own tax rate - the same receipt can be taxed very differently depending on which head it's classified under.
What happens to income that doesn't fit any of the first four heads?
It falls under "Income from other sources," the residual head, which is designed to capture any taxable income not covered elsewhere.
Related sections
Want this applied to your actual filing, not just explained?
Get help classifying and filing your income correctlyLast updated 9 September 2026