Income from other sources’ is the residual head of income. Hence, any income which is not specifically taxed under any other head of income will be taxed under this head. It is the fifth and residuary head of income.

1. INCOME FROM OTHER
SOURCES(56-59)
BY
Dr. J V R Geetanjali
Assistant Professor
Bhavan’s Vivekananda College

3. Contents
• 1. Definition.
• 2.Format to compute Income from other sources
• 3. General Incomes u/s 56(1)
• 4. Specific Incomes u/s 56(2)
• 5. Deductions u/s 57

4. Definition
• Income from other sources’ is the residual head of income. Hence, any
income which is not specifically taxed under any other head of income will
be taxed under this head.
• Winnings from lotteries, crossword puzzles, races including horse races, card
game and other game of any sort, gambling or betting of any form
whatsoever, are always taxed under this head.

5. Format
• Computation of Income from other sources for the
• A/Y 2020-21of Mr.XY
Particulars
I.General Incomes u/s 56(1)
II .Specific Incomes U/s 56(2)
Total Income from Other Sources
Less Deductions U/s 57
Taxable Income from other sources
Amount
Xxxx
Xxxx
Xxx
Xxxx
Xxxx
Xxxx
xxxxxxxxxxx

6. General Incomes u/s 56(1)
• Income from sub-letting of a house property by a tenant;
• insurance commission;
• family pension (payments received by the legal heirs of a deceased employees);
• director's sitting fee for attending board meetings;
• interest on bank deposits/deposits with companies;
• interest on loans;
• income from undisclosed sources;
• remuneration received by Members of Parliament;
• interest on securities of foreign governments;
• examinership fees received by a teacher from an institution other than his employer;

7. • total interest till date on employee's contribution to an unrecognised
provident fund at the time when the payment of lump sum amount from the
unrecognised provident fund is due;
• rent from a vacant piece of plot of land;
• agricultural income from agricultural land situated outside India; (xv) interest
received on delayed refund of income-tax;
• income from royalty, if it is not income from business or profession;
• Director's commission for standing as a guarantor to bankers;
• Director's commission for underwriting shares of a new company;

8. • Gratuity received by a director who, under the relevant contract, is not an employee
or servant of the company, is assessable as income from other sources;
• Income from racing establishment;
• Income from granting of mining rights;
• Income from markets, fisheries, rights of ferry or moorings;
• Income from grant of grazing rights;
• Interest paid by the Government on excess payment of advance tax, etc.;
• Income received after discontinuance of business.
• Advance Money forfeited on cancellation of Sale agreement

9. • In the case of income in the nature of family pension, a deduction of a sum
equal to thirty-three and one-third per cent of such income or fifteen
thousand rupees, whichever is less.
• Explanation.—For the purposes of this clause, "family pension" means a
regular monthly amount payable by the employer to a person belonging to
the family of an employee in the event of his death ;

10. • the deduction available is 15%. However, the maximum deduction allowed
shall be limited to Rs 20,000.

11. Specific Incomes u/s 56(2)
• 1. Dividends
• 2.. Casual Incomes
• 3. Income from Letting of Plant & Machinery
• 4. Composite Rent
• 5.Interest on securities
• 6.Gifts
• 7.Income from the activity of maintenance of horses for race purposes

12. Dividends
Indian
10(32)
Exceeding
10 lakhs
@10%
Foreign
56(2))
Cooperative
societies
(56)2

13. Casual Incomes
• 1.Winnings from lottery
• 2.Horse races
• 3.Card games-no TDS
• 4.Betting no TDS
• 5.Tv Reality shows
• 6. lotteries Tax deducted at Resource
• 7.Gambling Flat rate ---30%
• TDS If the income is more than Rs 10,000@ 30%

14. Gross up Income
• In case amount received by the assessee is given as net amount or received
• Or collected by bank= Net amount
• Gross up value = Net amt recd x Rate of TDs
• 100-TDS(30)
• 1,00,000-------70000
• 70000x30 =1,00,000
• 100-30

15. DEDUCTIONS U/S 57
• 1, Commission or brokerage charges to receive interest on securities or
dividend incomes.
• 2.Repairs & depreciation in case of Lettting of Plant & Machinery
• 3. Standard deduction of a sum equal to 33 1/3% or 1/3 rd of such family
pension or Rs. 15,000 whichever is less.
• 4.Deduction from royalties received by authors : actual expenses spent to get
that income can be claimed.

16. Letting of Plant & Machinery
• The expenses related maintenance of P& M can be claimed as deduction
• Depreciation
• Repairs
• Insurance U/s 57

17. Composite Rent
• Some times when the machinery cannot be let out separately from the
building then the building along with machinery would be let out.
• 1. Rent for building IHP
• 2. Letting of P& M IOS
• Inseparable in nature
• Full amount should be treated as IOS

18. Interest on securities
• Meaning
• Bond, debt, paper, debenture
• Security
• certificate

19. • Who can issue
• Govt
• State govt
• Local authority
• Company
• Statutory corporation

20. Taxability of interest
• Due basis
Exempted securities(u/s
10)
Tax free securities
Less tax securities

21. Exempted securities 10(15)
• Redeemable NTPC bonds
• National Plan certificates
• National Defecnce Bonds
• Special bearer Bonds 1991
• Mahanagar Telephone Nigam Ltd
• Indian Railway Finance corp securities
• Power Finance Corpo bonds’
• REC bonds
• Capital Investment Bonds
• National Relief Bonds

22. Tax free Securities
a). Tax free commercial b) Govt securities
• Tax is paid by issuing authority and the interest received by the assessee is
after deducting TDS only.= Net Interest
• @10% TDS
• Gross up =Net interest recd x 100
• 100-TDS

23. Problem no 2
• Computation of Income From other sources for the a/y 2020-21 of Mr R
• General income u/s 56(1) nil
• Specific Incomesu/s 56(2)
• Int on securities
• 1. interest on tax free debentures 90,000x10%=9000
• Gross up= 9000x 100/ = 10000
• 100-10
• 2.Interest on Panjab Govt loan 1,00,000x12% 12000
• 22000

24. 3. Less tax Securities---@10% TDS
Tax is deducted by issuing authority before
payment of interest.
• If the face value of securities and the rate of interest is given calculate
directly gross interest.
• If you are given interest received or interest after TDS or interest collected
by the bank calculate
• Gross up value=Net interest recd x 100
• 100-TDS

25. Deduction u/s 57
• 1. Bank collection charges or commission to collect interst on securities
• 2.Repairs , Depreciation and Insurance in case of letting P&M
• 3. Employees cont to ESI
• 4. Family pension either 33 1/3% or 1/3 of such amount or Rs 15,000
whichever is less 100/300
• 5.Deduction for royalties allowed
• 6.Deduction w r t maintenances of horses for horse races

26. • Thank you