Income-tax Act 2025, Section 13 lays down the five heads of income; how it differs from Section 14 of the 1961 Act

Every income-tax computation under income tax rules begins with a sorting exercise: wages go under one head, rent under another, a share sale under a third. The rule that requires this has moved from Section 14 of the Income-tax Act, 1961 to Section 13 of Income-tax Act, 2025 and changed its wording. However, nothing of substance about it has changed under the new law effective from April 1, 2026.

For the taxpayer the consequence of the change in the Section's title is nil. The five heads of income, the order in which they appear, and the computation rules for each remain unchanged. However, because this is the first step in every return, and because the heads of income are referred to in forms, intimations and assessment orders, readers are likely to notice the new numbering even through the law behind it is the same.

Section 14 of the 1961 Act had six heads of income. It said, "save as otherwise provided, all income shall, for the purposes of charge of income-tax and computation of total income, be classified under the following heads of income": Salaries as head A, then head C for income from house property, head D for profits and gains of business or profession, head E for capital gains, and head F for income from other sources.

However, nothing was mentioned under head B in the old Act. It now survives in the new Act but only as a deleted entry.

Section 13 of the 2025 Act has only five heads of income. It states the same rule in a single unbroken sentence: 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 (a), income from house property (b), profits and gains of business or profession (c), capital gains (d), and income from other sources (e).

Three small differences follow in the new Act under Section 13:

• "All income" becomes "all incomes".

• The lettered heads A to F become clauses (a) to (e).

• And the gap left by the deleted head B disappears

So the five heads of income now run consecutively with no missing letter.

Salaried employees, senior citizens, non-resident Indians, stock market investors and traders, mutual fund investors and freelancers all compute income under the same five heads as before. Where the change shows up is in cross-references. A return, a computation sheet or an order that cites the heads by number, will now point to Section 13 of the 2025 Act.