Income of salary or business & professional

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

13 April 2013 Labour /carpenter/Worker/Electrician

above all are working under daily work basis.

Is this income calculate under Salary or Professional income...??

CA bhargava

CA bhargava (Expert)
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13 April 2013 salary will be present only when there is employee and emplyer relation., if not it will be a business or profession

so it depends the upon the nature of engagement

Querist : Anonymous

Querist : Anonymous (Querist)

13 April 2013 if labour worker get 300 per day .
They have not any agreement.

just work & get money per day.

so..this is a professional work..?

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Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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31 July 2024 In the context of Indian income tax laws, the classification of income for individuals working as daily wage workers, carpenters, electricians, or similar professions depends on the nature of their work relationship and income structure. Here’s how these types of income are typically categorized:

### **1. Classification of Income**

**a. ** **Salary Income:**
- **Nature:** Salary income typically arises from a formal employer-employee relationship where the employee works under a contract or agreement, receives regular payments, and has specified terms of employment.
- **Characteristics:** It includes benefits such as bonuses, allowances, and other perks, and is usually taxed under the head "Salaries."

**b. ** **Professional Income:**
- **Nature:** Professional income arises from practicing a profession that requires specialized knowledge or expertise, such as doctors, lawyers, or accountants. It is usually earned by individuals who have a specific profession and often work under a formal agreement or contract.
- **Characteristics:** This type of income is taxed under the head "Profits and Gains of Business or Profession" and may include fees for services, consultancy charges, etc.

**c. ** **Business Income:**
- **Nature:** Business income arises from activities carried out in a business-like manner, which involves the sale of goods or services. This includes income earned by individuals or entities engaged in business operations.
- **Characteristics:** Business income is also reported under "Profits and Gains of Business or Profession" and includes various business-related expenses.

### **2. Classification of Daily Wage Workers and Similar Jobs**

**a. ** **Daily Wage Workers (Labourers, Carpenters, Electricians):**
- **Nature:** If individuals such as daily wage workers, carpenters, or electricians work on a day-to-day basis without a formal contract, they are generally considered to be in the category of casual labor or manual workers.
- **Characteristics:** Since there is no formal agreement or ongoing employment, their income is not classified as salary or professional income. Instead, it falls under **“Income from Other Sources”** or could be seen as **“Income from Manual Labor”** if it is more applicable.
- **Taxation:** The income of daily wage workers is taxed under the head **“Income from Other Sources”**. They are not considered professionals or employees in the traditional sense, so professional tax provisions do not apply.

**b. ** **No Agreement, Casual Work:**
- **Nature:** For individuals who work on a daily basis with no formal agreements and get paid daily, this income is categorized differently from professional or salary income.
- **Characteristics:** It’s typically considered casual labor or casual income. It’s usually reported as **“Income from Other Sources”** unless it is directly related to a business activity.

### **3. Practical Application and Reporting**

**1. ** **For Workers:**
- **Income Reporting:** Daily wage workers should report their income as **“Income from Other Sources”** if they are not running a business or practicing a profession. There’s no specific requirement to report such income under a salary or professional category.
- **Taxation:** Income is taxed based on the applicable income tax slab rates for individuals.

**2. ** **For Employers/Contractors:**
- **Withholding Tax:** Employers or contractors hiring daily wage workers are not required to withhold TDS unless the payments are substantial and fall under specific provisions for contractors or professional payments.

### **4. Summary**

- **Daily Wage Workers:** Income should be reported under **“Income from Other Sources”**.
- **Professional Income:** Typically includes those practicing specialized professions under formal agreements, not applicable to daily wage workers.
- **Business Income:** Applicable if the individual is running a business, which involves regularity and an organized structure.

In conclusion, daily wage workers such as labourers, carpenters, or electricians who receive daily payments and have no formal agreement are not considered professionals or salaried employees. Their income is best reported under **“Income from Other Sources”** or treated as casual labor income for tax purposes.