A well made ppt for Students of finance related subjects that describes too well INCOME FROM OTHER SOURCES (IFOS).
This will greatly help students from BBA, B.Com, MBS, M.Com
2. DEFINITION
• Fifth and last head of Income
• Residuary in Nature
• Any income taxable
• But does not fall under any other
head.
• Sec 56 lays down income taxable.
• Sec 57 and 58 lays down
deductions.
3. How to check which Income can be Taxed?
• Is it Exempt ?
• Is it taxable under any
specific head of income?
• Is it a capital receipt
• If the answer to all the
questions is “NO” then, it is
taxable under the head
IFOS .
4. Which Sections Apply ?
• Section 56 lists down what can
be taxed under the head of IFOS.
• Section 57 lists down the
deductions available under the
head IFOS.
• Section 58 lays down the
amounts NOT deductible.
• Section 59 lays down that
Section 41(1) would apply to
IFOS also.
5. What can be Taxed ?
Under sec 56 following can be taxed:-
• Dividends other than dividend exempt
u/s. 10(34)/ 10(35) – for e.g. dividend
from foreign companies/co-op.
banks/co-op societies etc.
• Winnings from lotteries, crossword
puzzles, races, horse races, card games,
other games of any sort, gambling or
betting.
• income by way of interest on securities,
if the income is not chargeable to
income-tax under the head “Profits and
gains of business or profession”
6. • Income from machinery, plant or
furniture belonging to the assessee and
let on hire (if its not charged earlier)
• When an assessee lets on hire
machinery, plant or furniture belonging
to him and also buildings, and the
letting of the buildings is inseparable
from the letting of the said machinery,
plant or furniture, the income from
such letting .
• Income referred to in sub-clause (xi) of
clause (24) of section 2 (sum received
under a Keyman Insurance Policy
including bonus)
CONTD.
7. Meaning of Relatives u/s 56
For the purposes of this clause, “relative”
means —
1. spouse of the individual;
2. brother or sister of the individual;
3. brother or sister of the spouse of
the individual;
4. brother or sister of either of the
parents of the individual;
5. any lineal ascendant or descendant
of the individual;
6. any lineal ascendant or descendant
of the spouse of the individual;
7. spouse of the person referred to in
clauses (ii) to (vi)
8. Anomaly in definition of Relative
• If a nephew receives a gift
from his uncle, he does
not have a problem
because uncle is a
“relative”.
• But if same uncle receives
a gift from that nephew
then it is taxable because
nephew is not a “relative”.
9. Meaning of Property
For the purposes of this clause
“property” means the following capital
asset of the assesse, namely:—
i. immovable property being land
or building or both;
ii. shares and securities;
iii. jewellery;
iv. archaeological collections;
v. drawings;
vi. paintings;
vii. sculptures;
viii.any work of art; or
ix. bullion
10. Deductions u/s 57 & 58
• Any reasonable sum paid by way of
commission or remuneration to a
banker or any other person for the
purpose of realising such dividend
or interest on behalf of the assesse.
• Current Repairs
• Rent, Rates and Taxes
• Insurance Premium
• Depreciation
• Standard deduction of 331/3% of
such income or Rs. 15,000
whichever is less.
11. Deductions (Contd.)
• As per Section 58, no deduction
would be allowed from income by
way of any winnings from
lotteries, crossword puzzles etc.
• Any other revenue expenditure
incurred wholly and exclusively
for the purpose of making or
earning such income.
• Personal Expenses are not
deductible.
• Wealth – tax is not deductible.
