Presentation on computation of income from other sources for the benefit of taxation students, based on provisions of Income tax Act 1961

1. Income from other Sources
Made by- Ishita Srivastava

2. Introduction
• Any income, profit or gains of the assessee,
which cannot be included in any other heads of
income (salary/ house property/ business or
profession/ capital gains) is chargeable under
the head of income from other sources.
• Residuary head of income

3. Income from Other Sources –
which section 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.

4. Section 56 income chargeable
under other sources
1. Dividends
Deemed dividend under section 2(22) from Indian company or
any dividend from foreign company is taxable in the hands of
shareholders. (Dividend is exempted from tax in the hands of
shareholders, since company is paying tax on divided).
2. Winning from lotteries etc.
Any winnings from lotteries, crossword puzzles, races
including horse races, card games and other games of any
sort or from gambling or betting of any form or nature
whatsoever.
3. Employees’ contribution towards staff welfare scheme
Any sum received by the assessee from his employee as
contributions to any staff welfare scheme (provident fund /
superannuation fund) is taxable in the hands of employer
under the head income from other sources if not chargeable
under the head business or profession.

5. 4. Interest on securities/bonds
Interest on debentures, govt. securities /bonds is taxable , if
not chargeable under the head business or profession.
5. Rental income from machinery, plant or furniture let on
hire if not chargeable under the head business or profession.
6. Sum received under Keyman insurance policy- sum
including bonus received under Keyman Insurance Policy shall
be treated as income chargeable to tax under this head if not
taxable as salary or business income.
7. Gifts- any sum of money or property received without
consideration by an individual or HUF from any person
exceeding Rs. 50,000, the whole of such amount is taxable in
the hands of recipient.
8. Interest on compensation or enhanced compensation

6. Deemed Dividends
Under section 2(22) the following payments or distribution by
a company to its shareholders 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 ,
deposit certificates 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 by closely held
company to a shareholding substantial, interest provided
the loan should not have been made the ordinary course
of business

7. 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

8. • 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 sources

9. Tax incidence on winning from
lotteries etc.
• Gross winning from lotteries, crossword
puzzles, races including horse races, card
games of any sort or from gambling or betting
of any nature whatsoever are chargeable in
income tax at flat rate of 30 percent

10. Permissible Deductions allowed
under section 57
1. Commission or remuneration for realizing dividend or
interest on securities
2. Deduction in respect of employees contribution towards
staff welfare schemes (if contributing is credited to
employees respective fund before due date)
3. Repairs, depreciation and insurance in case of letting of
plant , machinery and furniture, building etc.
4. Standard deduction in case of family pension (15,000 0r
33 one third percent of such income , whichever is less.)
5. Any other expenses for earning income
6. Standard deduction 50 percent in case of interest on
compensation

11. Amounts NOT Deductible (58)
• Personal expenses
• Any interest paid outside India on which Tax is not
deducted at source TDS
• Any salary paid outside India without TDS
• Any expenditure or allowance in connection with income
by way of any winning from lotteries etc.

12. THANK YOU!!