Earning (Income)
Money is not the whole thing, but it is very vital in a person's life. Money helps us accomplish our goals and supports the things we care about most, like family, education, health care, fun and fulfilling our basic needs. This gives us freedom to use our skills, the ability to make our own choices, and financial security. The money a person earns from their work, services, or investments, or from the business is called income.
Important Points –
What is an earning/income
Definition of an earning/income
Feature of an earning/income
Income Ways
What is an earning/income
Earning money is how a person gets cash to take care of themselves and their family. It is the first step in planning their finances. Earning/ Income is the money in form of salary by the individual or profit by any business.
Definition of Earning/Income
Income is the money a person or business gets regularly, like daily, weekly, monthly, or yearly pay for work or profits from business. Extra payments and benefits are also important. Most income is taxed unless comes under exemption.
Earning/ Income as per Income Tax Act, 1961
According to Income tax act following earning comes under taxable income
Salary
Profits and Gains from Business and Profession
Dividends
Voluntary contributions made by trusts, charitable institutions established wholly or partly for charitable or religious purposes
Perquisites
Special or Other Allowances
Capital Gains
Income from Other Sources
Feature of an earning/income
Features of earning/ Income is as given below :
The person can earn money every day, week, month, or year.
The government can apply tax when income is received or when it is earned.
The income tax law treats all income the same, whether it's earned legally or illegally.
People can earn money for a short time or a long time. Also, money received all at once or in parts will be taxed.
According to the Income Tax Act of 1961, income includes money made from work, profit from selling things, and losses.
If someone gets gifts over Rs. 50,000 in a year, those gifts are counted as income for individuals and Hindu Undivided Families (HUFs).
Income Ways
Two main ways of Income is Offline & Online
Offline Income -
A person can earn money from different places, and this can be grouped into several types. There are five main types of income. –
a) Salary income
b) House Property Rental Income
c) Income from Business and profession profits and gain
d) Earning from Capital Gain
e) Other Sources
Online income
It means money made from activities on the internet. This can be selling things, offering services, taking surveys, or making money from social media.
We will see both ways of income in detail in next post.
Upshot
Making more money can give you more choices, but it doesn't mean you will always make good decisions. You still need to understand saving, spending, investing, and sharing. If you want to spend, save, invest, or give more, you need to earn more money. Sadly, because it's easy to get into debt, many people forget the importance of earning money.
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