CHAP IV F – INCOME FROM OTHER SOURCES
A. Sec 56 – Chargeability
The following income shall be charged to tax under head “income from other
sources”
a) Dividends
b) Income by way of winning from lotteries, cross word puzzles, races
including horse race, gambling, betting etc.
c) Incomes like interest on securities; letting of machinery, plant or
furniture together with or without building; employees contribution to
welfare funds etc if not charged under head business or profession
d) Sum received under keyman insurance policy if not charged under
head ‘salaries’ or under ‘business or profession’
e) Interest on compensation or enhanced compensation
f) Any advance received against sale of capital asset and forfeited.
g) Sum of money or property received by any person as detailed below:
a) The sum is not taxable if received
a) from a relative
b) on occasion of the marriage of individual
c) under a will or by way of inheritance
d) in contemplation of death of payer
e) received from local authority
f) received from any fund, foundation, university, other
educational institution, hospital, medical institution,, any trust,
or institution referred in section 10(23C), charitable institute
registered u/s 12AA
g) from such class of persons and subject to conditions as may be
prescibed
b) Relative means:
a) Spouse of individual
b) Brother or sister of individual
c) Brother or sister of spouse of individual
d) Brother or sister of either of the parents of individual
e) Any lineal ascendant or descendant of the individual
f) Any lineal ascendant or descendant of the spouse of individual
g) Spouse of the person referred in b – f
B. Sec 57 – Deductions:
a) In respect of family pension a sum equal to 33.33% of the pension or
Rs.15,000 whichever is less.
b) In case of dividend deduction of interest on funds taken for investment
in securities subject to limit of 20% of such income.
c) In case of lease rental on letting of machinery, plant and furniture with
or without building, the following shall be deducted; a) Repairs b)
Insurance c) depreciation
d) Interest received on compensation or enhanced compensation – 50%
of such interest.
e) Any other expenditure not being capital expenditure, wholly and
exclusively for purpose of earning income.
C. Sec 58 – Inadmissible expenses
a) personal expenses
b) wealth tax
c) expenses of the nature specified in 40A
d) any interest or salary chargeable under this act and paid outside India
without TDS
e) Cash payment in excess of Rs. 10,000
f) No deduction shall be allowed in respect of winnings from lotteries,
cross word puzzles, card games, races include horse race, gambling
betting etc
D. Exempted income under head income from other sources
a) Interest on notified securities, bonds, annuity certificates or other
savings certificates. – Tax free bonds of Indian Railway finance
corporation, NHAI, RECL, HUDCL, Indian infrastructure Co Ltd., Power
finance corporation etc.,
b) Interest on Non resident external account
c) Interest on Sukanya samruddhi account
d) Interest on post office savings account up to Rs. 3,500 in case of
single account and Rs. 7,000 in case of joint account
e) Family pension received by member of armed forces, where the death
has occurred in course of operational duties
f) Family pension received by member of armed forces, who has been
awarded notified gallantry award
E. Tax rates of income under the head other sources
Nature of income Tax rates
Casual incomes like lottery Flat 30%, without any deductions. Basic
winnings, races, betting, tv show exemption limit cannot be used. +
etc., surcharge if applicable + health cess 4%
Unexplained cash credits, 60% income tax
investments, money, bullion, 25% Surcharge on Income Tax
jewellery or expenditure 4% of health cess on IT and Surcharge
Effective rate 78%
Other incomes under income from Regular normal applicable rates
other sources
1) Following information compute taxable income from other sources
a) Income from interest on fixed deposit with SBI Rs 12,000.
b) Interest on listed bonds of a public sector company Rs 17,940[net of
TDS of 10%].
c) Interest on post of savings bank account Rs. 12,000
d) Royalty on publication of a book in Economics Rs 30,000, he incurred
Rs 9,000 as incidental expenses in connection with publication of the
book.
e) Income from coffee plantation in Coorg Rs 90,000.
f) Divided received from a co-operative society Rs 16,000.
g) Lottery winnings received Rs 34,550[net of TDS of 30%]
h) Family pension on account of Mrs X (who was government employee
and expired in 2014) Rs. 1,98,000 during the year
i) Purchase of immovable property at Rs. 15,00,000 and the stamp duty
value as on date of purchase is Rs. 15,80,000.
j) Received Gift from Son in law Rs. 25,000. He also received gifts worth
Rs. 52,000 from his friends on his birthday.
