Income from Other Sources

It is residuary head of Income which must satisfy the following conditions:-

  1. There must be an income;
  2. This income is NOT exempt under the IT Act 1961; and
  3. This income is not chargeable to tax under the other heads of income viz. "Salary", "House property", "Business or Profession" and "Capital Gains".

Example of Income from Other Sources

Some examples of certain incomes normally taxed under this head are given below:-

  • Interest on bank deposits, loans or company deposits,
  • Dividend;
  • Family pension (received by legal heirs of an employee),
  • Income from sub-letting of house property by a tenant,
  • Agricultural income from agricultural land situated outside India,
  • Interest received from IT Dept. on delayed refunds,
  • Remuneration received by Members of Parliament,
  • Casual receipts and receipts of non-recurring nature,
  • Insurance commission,
  • Examiner-ship fees received by a teacher (not from employer),
  • Income from royalty,
  • Director's commission for standing as guarantor to bankers,
  • Winnings from Lotteries, Crossword Puzzles, Horse Races and Card Games,
  • Interest on securities,
  • Income from letting out of machinery, plant or furniture, etc.
  • Any sum exceeding Rs. 50,000/- received without consideration shall be treated as income provided that the sum of money is not received from any relative or on the occasion of marriage of the individual or under a will or inheritance etc.

Computation of Income from Other Sources

Income from this source is computed after deducting the following:-

  1. Expenditure incurred during the previous year;
  2. Expenditure incurred wholly and exclusively for the purpose of earning the said income;
  3. After deducting allowances and deduction provided in Section 57 of the IT Act 1961;

And after disallowing the following:-

  1. Expenditure relating to personal expenses
  2. Interest, salary payable outside India on which TDS not made,
  3. Income / Wealth Tax paid, excessive-payments to relatives etc.
  4. Expenditure in respect of royalty and technical fees received by a foreign company;
  5. Expenditure in respect of winning from lottery.

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