INCOME FROM OTHER SOURCES

Special Provisions
Income Descriptions
Dividend Sec. 2 (22) from Indian Company is not
Dividend taxable in the hand of shareholders.
Deemed Dividend under sec. 2(22) (e) from an Indian
company or any dividend from a foreign company is
taxable in the hand of shareholders under the head “
Income from Other Sources”.

Winning from Lotteries It Includes any winning 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.
Employees contribution Any sum received by the assessee from his employee
towards staff welfare as contributions to any staff welfare scheme is
scheme taxable in the hand of employers under the head of
“Income from Other sources”

Interest on Securities Interest on Debentures, Government Securities/

Bonds is taxable under the head “ Income from Other
Sources”.
Rental Income of Rental Income from Machinery, Plant, or Furniture let
Machinery, Plant or on hire is taxable as income from other sources
Furniture
Sum received under Any sum received under a Keyman insurance policy
keyman insurance policy (including bonus) is taxable as income from other
 Income Descriptions

Rental Income of Such Rental Income is taxable under the

letting out of Plant, head “ Income from Other Sources” (if the
Machinery, or
same is not taxable under the Business
Furniture along with
letting out of building
Income)
and two lettings are
not separable
If any sum of money or property is
received during a pervious year without
GIFT consideration by an individual or a HUF
from any person or persons exceeds Rs.
50,000, the whole of such amount is
taxable in the hand of the recipients as
“Income from other sources”.
Interest on Income by way of Interest received on
Compensation or Compensation is taxable under the head
enhanced Income from other Sources.
compensation
50 % is exempted and only 50% of such
Interest is taxable.
What is regarded as Interest on Securitas [Sec.56(2)]
• Interest on Securities [Sec.2(28B]:
a. Interest on Gilt-edge securities
b. Interest on Securities other than Gilt-edge
Securities

Basis of Charges:
Cash basis of books of account : “Receipts”
Mercantile Basis of books of account : “Due”.

Due Date of Interest:

Interest Become due on Specified Date.
For Instance, if Specified due dates of interest of
particulars securities are March 1 and September 1
every year.
 Example
Q:1 Mrs. X (27 years) is resident in India. Find out the net income and
tax liability for the information given below for the assessment year
2012-13:
Winning from Lottery Rs. 35000 (expenditure incurred Rs. 500),
Long-term capital gain (on transfer of Gold) Rs. 2,25,000, Salary
income: Rs. 2,10,000, Interest on debenture :Rs. 32,000, Public
Provident Fund contribution Rs. 70,000.
Q:2: Mr. X (32 years) is resident in India. Find out the net income and
tax liability for the information given below for the assessment
year 2012-13:-
Winning from races : Rs. 10,000 (expenditure incurred: Rs. 200) short
term capital gain (STT is applicable) Rs. 175000, Bank Interest :
Rs. 81,000, PPF contribution 14000
Winning from Lotteries, Crossword puzzles
and Card games

• U/S 194B and 194BB tax is deductible @ 30 per cent

if winning amount exceeding Rs. 10,000 in case of
winning from lotteries or crossword puzzles or card
games.

• In case of winning from Horse race tax deductible is

@ 30 per cent if winning amount exceeds Rs. 5000.
 Interest on Securities

• Securitas: Interest on any security of the Central

Government or a state Government
• Interest on debenture or other securities for money
issued by or on behalf of local authority or a company
or a corporation.
• Due date of Interest: generally interest becomes
due on due dates specified on securities.
• Exemption List:
GIFT
Self Assessment
During the year 2012-13, Mr. Kumar received following gifts. Ascertain the total amount of gift
charged to tax.
Gift of Rs. 84,000 from his father.
Gift of Rs. 25,200 received from his friend on his birthday.
Rs. 2,52,000 received on account of will of his grandfather.
Rs. 30,000 received from his friends on the occasion of marriage anniversary.
Considering above, Mr. Kumar will have following tax issues:
• Gift received from father will not he charged to tax (since father is covered in the definition
of relative), hence, Rs. 84,000 will not be charged to tax.
• Gift received from the friends is not covered in any of the above discussed exemptions and,
hence, Rs. 25,200 received from his friend on his birthday will be charged to tax.
• Money received on account of Will is covered in the above discussed exemptions and,
hence, nothing will be charged to tax on account of Rs. 2,52,000 received on account of Will
of his grandfather.
• Money received on account of marriage of an individual in covered in above discussed
exemptions. However, the benefit is not available on marriage anniversary. Hence, Rs.
30,000 received from his friends on account of marriage anniversary will be charged to tax.
Considering above discussion, the total amount of gift not covered in any of the specified
exemptions will come to Rs. 55,200 (i.e., Rs. 25,200 + Rs. 30,000). If the gift not covered in
specified exemptions exceeds Rs. 50,000 then the entire amount of such gift is charged to tax.
Hence, taxable amount of gift will come to Rs. 55,200.
 Self Assessment

• Mr. X holds the following securities on April 1, 2011:

Rs. 10,00,000 5% UP Govt. Loan (interest date January 1)
Rs. 400000 6% non listed debentures of ABC Ltd. (interest:
June 11 and December 11 every year)
Rs. 25, 000 8% debenture of PQR Ltd. (interest : June 15 and
December 15)

On December 1, 2011 Mr. X sells Rs. 25000 8% debentures of PQR

Ltd. Calculate the taxable income of Mr. X for the assessment year
2012-13 on the assumption that his business income is Rs. 564000,
post office saving bank interest is Rs. 43000 and he has received a
gift of Rs. 1 lacs in foreign currency from a friend on December 1,
2011 on his marriage anniversary
 Income Tax on Dividend Income A.Y. 2021-22 and onwards
• Dividend income taxable in hands of shareholders w.e.f. 1-4-2020
Till Assessment Year 2020-21, the dividend income from a domestic company was exempted in
the hands of shareholders under section 10(34) of the Income Tax Act. But in this case, the
company was liable to pay Dividend Distribution Tax (DDT) under section 115-O.

However, the Finance Act, 2020 has made provisions of section 115-O ineffective which means
that the domestic companies are no more liable to pay DDT on such dividends paid by them.
Thus, with effect from A.Y. 2021-22, the dividend income shall be taxable in the hands of
the shareholders.

• Section 115BBDA not relevant from A.Y. 2021-22

Section 115BBDA provides for the taxability of dividends over Rs. 10 Lakhs in the hands of
the shareholders. Since from A.Y. 2021-22, the entire amount of dividend income is taxable,
the threshold limit of Rs. 10 Lakhs as given u/s 115BBDA is of no effect.

• When dividend income shall be taxable

Final Dividend: According to Section 8 of the Income Tax Act, the Final dividend including
deemed dividend shall be taxable in the year in which the dividend is declared,
distributed, or paid whichever is earlier.

Interim Dividend: Interim dividend is chargeable to tax on a receipt basis i.e. in the year in
which it is received by the shareholder.
• Mr Amit submits you the following details for assessment year
2023-24, calculate tax liability :
Income Amount
Income under the head salary 10,02,000
Income from house property 8,00,000
Income from Long term Capital Gain 6,00,000
Winning from Lotteries 1,00,000
Invested in Government securities ₹7,00,000, Interested received
@8% per annum (Interest payable is half yearly i.e 15 th June and
15th December).
Dividend from Domestic Company 1,50,000
Gift from relative 60,000
Investment u/s 80 C (Mutual Fund + FD) 160000
Invested in National Pension Scheme (80E) 60000
Tax deducted at Sources (TDS) 50,000