INCOME FROM OTHER SOURCES

As per income tax act, total income is divided into following 5 heads of incomes:

  1. Income under the head salaries
  2. Income from house property
  3. Profits and gains from business or profession
  4. Income under the head capital gains
  5. Income from other sources
  • As per [Sec 56(1)] of income tax act if any income is not exempt from tax i.e. taxable income but not covered or taxable under first four heads of income then it will be taxable under the last and residual head of income and it will be known as income from other sources.
  • As per [Sec 56(2)] following 8 incomes are taxable under the head income from other sources

  1. Dividend
  2. Interest on securities
  3. Casual income: i.e. winning from lotteries, crossword puzzles, card game or any other game, horse race or any other races, gambling, betting, etc. (other than income from owning and maintaining race horse). Such incomes are always taxable at a fixed rate of income tax i.e. 30%. As per [Sec 194(B)] of income tax act if winning from lottery, crossword puzzle, card game or other games exceeds RS.10,000 then TDS is applicable at 30%. As per [Sec 194(BB)] of income tax act if winning from horse race exceeds RS.5, 000 then TDS is applicable at 30%. If net amount is received after deducting tax then gross amount is to be calculated and gross amount is taxable under the head other sources. GROSS AMOUNT = [NET AMOUNT̅ /100 – TDS RATE] X 100.
  4. Rent income from letting out plant, machinery or furniture(if it is not taxable as business income)
  5. Rent income from letting out of plant, machinery or furniture along with building and letting two assets is inseparable (if it is not taxable as business income).
  6. Sum received under KEYMEN insurance policy (if it is not taxable as salary income or business income).
  7. Gift
  8. Interest received for late payment of compensation for compulsory acquisition of any asset.
  • Illustrative list of incomes taxable under the head other sources.
  1. Income from subletting.
  2. Interest on deposits and loans
  3. Royalty income
  4. Director’s fees
  5. Director’s commission for acting as a guarantee to bank.
  6. Director’s commission for underwriting shares of the company
  7. Rent of plot of land
  8. Agricultural income from a place outside India.
  9. Examination fees received by a teacher from person other than employer
  10. Salary received by members of parliament
  11. Family pension received by family members of deceased employee.
  12. Income from undisclosed sources
  • Sum of money or property received without consideration – if any individual or HUF receives sum of money or property without consideration of for inadequate consideration on or after 1st October 2009 then it is chargeable to tax under the head income from other sources as per the following provisions.picture2picture3

(C) Moveable property – here the term moveable property includes following capital asset of the assessee.

  1. Shares and structure
  2. Jewellery
  3. Archaeological collection
  4. Drawing and painting
  5. Sculptures
  6. Any work of art
  7. Bullion (gold coin, gold bar,)picture4
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