Income from other sources

1. INCOME FROM
OTHER SOURCES

2. Heads of Income
The Income Tax Department breaks down income into five heads of
income for the purpose of income tax reporting:
• Income from Salary
• Income from House Property
• Income from Capital Gains/Loss
• Income from Business and Profession
• Income from Other Sources
Income from Other Sources covers income that does not fall under
any of the other heads of income.

3. What is income from other sources
• Income from Other Sources covers income that does not fall under any of
the other heads of income – Residuary Income
TYPES OF OTHER INCOMES
• RECURRING INCOME : Income received at regular intervals
• NON-RECURRING INCOME : Income received only once
•
ACCOUNTING METHODS:
• 1. Mercantile system - accrual basis
• 2. Cash system – receipt basis

4. Examples of Income Under other Sources
• Income from sub-letting
• Interest on Bank deposits and loans
• Income from royalty
• Directors Fees
• Ground rent
• Agriculture Income received outside India
• Directors commission for standing as a
guarantor to bankers
• Directors commissions for underwriting shares
of new company
• Examination remuneration received by teacher
• Remuneration received by a person from a
person other than his employer
• Rent of plot of land
• Insurance Commission
• Mining rents and royalties
• Interest on foreign government securities
• Casual Income
• Annuity payable under will, contract, trust, deed
• Salary payable to MP
• Family pension received by family member of a
deceased employee
• Interest on employees contribution if provident
fund is unrecognized
• Income from undisclosed source

5. Income from Other Sources – which
sections apply ?
• Section 56 : Basis of charge
• Section 57 : Permissible Deductions
• Section 58 : Amount Not Deductible
• Section 59 lays down that section 41(1) would apply to income
from other sources also

6. INCOMES CHARGEABLE UNDER THIS
HEAD [SECTION 56]
1. Dividends
2. Winning from lotteries etc
3. Employees contribution towards staff welfare scheme
4. Interest on securities/bonds
5. Rental Income from machinery, Plant or furniture
6. Sum received under insurance policy
7. Gifts exceeding 50,000 is taxable
8. Interest on compensation or enhanced compensation

7. Deemed dividends
Under section 2(22) the following payments to its shareholder are
deemed as dividends to the extent of accumulated profits
1. Any distribution entailing the release of company assets
2. Any distribution of debentures , debenture stocks , certificate
of deposits and bonus to preference shareholders
3. Distribution on liquidation of company
4. Distribution on reduction of capital
5. Any Payment by way of loan or advance

8. Tax incidence on winning from lotteries
etc
• Winning from lotteries, crosswords, races including horse races,
card games or any kind of gambling or betting of any nature are
chargeable in income tax at rate rate of 30 %

9. SECTION 57 DEDUCTION ALLOWABLE
• In case of dividends or income in respect of units of a mutual fund or
income in respect of units from a specified company .
• In case of interest on securities
• Income consists of recovery from employees as contribution to any PF,
superannuation fund etc.
• Income from letting on hire of machinery, plant and furniture, with or
without building .
• Family Pension – 33-1/3% of such income or ` 15,000, whichever is less
• Interest on compensation/enhanced compensation received – 50% of such
interest

10. SECTION 58 DEDUCTIONS NOT
ALLOWABLE
• Any personal expense of the assessee.
• Any interest chargeable to tax under the Act which is payable outside India on which tax has not
been paid or deducted at source.
• Any payment chargeable to tax under the head “Salaries”, if it is payable outside India unless tax
has been paid thereon or deducted at source therefrom.
• 30% of sum payable to a resident on which tax is deductible at source, if such tax has not been
deducted or after deduction has not been paid on or before the due date of return specified in
section 139(1).
• Any expenditure in respect of which a payment is made to a related person, to the extent the same
is considered excessive or unreasonable by the Assessing Officer, having regard to the FMV. (f) Any
expenditure in respect of which a payment or aggregate payments exceeding ` 10,000 is made to a
person in a day otherwise than by account payee cheque/bank draft or ECS through bank account
or through such other prescribed electronic mode such as credit card, debit card, net banking,
IMPS, UPI, RTGS, NEFT, and BHIM Aadhar Pay

12. THANK YOU