April 04, 2025
6 mins read
Operating income shows profit earned from core business activities after subtracting direct operating expenses. It does not include interest or taxes. Net income is the final profit left after all costs, including tax and interest, are deducted. Operating income measures business efficiency, while net income reflects total profitability. Both help investors understand how well a company is performing and whether it is financially strong in the long term.
Operating income and net income are the two major indicators of a company's financial position that can be used to determine the company's status.
Operating income refers to the profit generated from the core company activities after the operating expenses such as wages, rent, and raw materials have been deducted. It does not include interest and taxes.
On the other hand, net income is the absolute profit left from the company after deducting all expenses. To be specific, these are operating costs, interest, and tax charges as well as non-operating gains or losses. Net income is the one that shows the company’s total profitability.
There are several forms under Income Tax Challan, each meant for specific tax payment categories. Below are the major types:
ITNS-280 is used to deposit income tax by individuals, Hindu Undivided Families (HUFs), and companies. It covers advance tax, self-assessment tax, regular assessment tax, and surcharge. Ensure the correct assessment year and PAN are entered. This challan is applicable when you're making direct payments toward your income tax liability.
ITNS-281 is meant for depositing Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) by deductors. It is used by both corporate and non-corporate entities. This challan requires TAN instead of PAN. Select the appropriate section code depending on the nature of the TDS/TCS being deposited with the authorities.
ITNS-282 is used to pay Securities Transaction Tax (STT), Banking Cash Transaction Tax (BCTT), and Equalisation Levy. These are levies collected on specific transactions such as stock trading or large cash withdrawals. This challan is used by financial institutions or those liable under special tax provisions for specific transactions.
ITNS-283 is for the payment of Fringe Benefit Tax (FBT), which was applicable to employers offering fringe benefits to employees. Though FBT has been discontinued, historical liabilities may still be cleared using this challan. It includes surcharge and interest, if applicable, based on the provisions under the Income Tax Act.
ITNS-284 is specifically applicable for payments under the Income Declaration Scheme, 2016. This scheme allowed taxpayers to declare previously undisclosed income by paying tax, surcharge, and penalty. The challan ensured compliance for declarations made under this one-time scheme, which was introduced to bring unreported income into the tax framework.
ITNS-285 is designated for tax payments under the Pradhan Mantri Garib Kalyan Yojana (PMGKY), 2016. This scheme allowed the declaration of unaccounted income with a mandatory contribution to a welfare scheme. This challan facilitates tax payments, surcharge, penalty, and deposits under the PMGKY disclosure scheme for compliance with the rules.
ITNS-286 is used for taxes paid under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. Individuals disclosing foreign assets or income are required to pay taxes through this challan. It includes tax, penalty, and surcharge components. It ensures compliance under the one-time disclosure window.
ITNS-287 is used for payments under the Direct Tax Dispute Resolution Scheme, 2016. This scheme aimed to resolve pending tax disputes by allowing taxpayers to pay a prescribed amount and settle the case. The challan enables payment of tax dues and penalties as agreed upon under the resolution mechanism.
To make a tax payment, visit the official Income Tax e-filing portal and enter your information exactly as listed below for each payment you make.
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Net income includes all revenues and expenses, including operating and non-operating items such as taxes, interest, and one-time events. Operating income, on the other hand, focuses solely on profits generated from core business operations, excluding non-operating factors.
Operating income provides insight into a company’s core business efficiency, while net income gives a broader picture by accounting for all factors affecting profitability. Both are essential for understanding a company’s financial health and potential for growth.
Yes, a company can have positive operating income but negative net income if it incurs significant non-operating expenses, such as high interest payments, taxes, or losses from non-core activities.
Non-operating expenses, such as interest on debt, taxes, or extraordinary losses, reduce net income. These costs are subtracted from operating income when calculating the final net income figure, which can lead to a lower overall profitability.
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Content Partner - Dalal Street Investment Journal Wealth Advisory Private Limited
This article is for educational purposes only and should not be considered investment advice. Market investments are subject to risks. DSIJ Wealth Advisory Private Limited is a SEBI-registered Research Analyst (Reg. No: INH000006396) and Investment Adviser (Reg. No: INA000001142). Please consult your financial adviser before investing.
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