Categorization: The One Habit That Makes Earnings' Reports Work
In the Getting Started guide we walked the whole path: import, reconcile, categorize, report. This post zooms in on the third step, because it’s the one that quietly decides whether the fourth step is useful.
Here’s the thing about a bank statement: it knows that ₹1,80,000 arrived on August 15th. It has no idea whether that was a client milestone payment (taxable professional income), a maturing fixed deposit (a different tax treatment entirely), or your own money coming back from another account (not income at all). The statement line is just a description and an amount. The tax meaning is missing — and the tax meaning is the whole point.
Categorization is how Earnings attaches that meaning. Every transaction maps to an Income Tax Department category — professional receipts, business expenses, capital gains, tax-free income — so the data isn’t just organized, it’s ITR-ready.
One number to watch
The Transactions screen keeps score for you. The summary card shows a Categorized progress bar — 18 of 22 in the shot above — and a one-tap Uncategorized filter drops you into exactly the transactions still waiting for a decision. Filter by credit or debit, work through the list, watch the bar fill.
That bar is worth watching, because it’s effectively the confidence level of every report in the app. A transaction without a category can’t be counted as income, can’t be deducted as an expense, and can’t be taxed — so it simply isn’t in the numbers yet.
You categorize less than you’d think
Doing this by hand for every line would be miserable, so Earnings learns to do it for you. A private, on-device ML classifier suggests categories as transactions come in, and every correction you make — a tap to override — becomes a training signal. The model retrains from your corrections right on the device; nothing is uploaded, ever.
Auto-categorized transactions don’t silently slip into your reports, though. They float to a Pending Review state until you confirm them — the model does the typing, you keep the judgment. After a few statements, most of your recurring transactions — the same clients, the same subscriptions, the same rent — arrive pre-labelled, and categorization shrinks from a chore into a quick review.
What the categories buy you
Switch to the Reports tab and the payoff is immediate. Everything on this screen is derived from categories:
- Taxable Income, Expenses, Net — the headline numbers are sums over categorized transactions for the selected tax year. Tax-free income is excluded from the taxable figure because its category says so.
- Income and Expenses Reports — per-category breakdowns, so you can see professional receipts separately from other income, and exactly where the expenses went. The same category columns come along when you export CSV.
- Estimated Tax — the tax engine applies the slabs to your categorized income. In the screenshot the computed liability is 0, with the reason right on the label: the 87A rebate applies. That’s a category-level conclusion — the engine can only know income qualifies after you’ve told it what the income is.
- Period Income Breakup — income split across advance-tax periods, so you know what each installment should look like before the due date, not after.
The rules engine reads the same data: Section 44ADA presumptive-taxation eligibility, cash-receipts-ratio warnings, receipts-threshold proximity — all of it keyed off categorized totals. Uncategorized transactions are invisible to every one of these.
The habit
This is why the progress bar sits on the main Transactions screen instead of buried in a report: the app works best when categorization is a small recurring habit, not a year-end archaeology project. Import a statement, review the suggestions, clear the uncategorized filter — a few minutes per statement. Come filing season, the reports aren’t something you have to prepare. They’re already there.
Earnings is available for iPhone, iPad, and Mac. All parsing, ML training, and report generation happen on your device — see the Getting Started guide for the full workflow.