WELCOME TO
MSTU KOLKATA
Income From
OTHER SOURCES
MSTU, Kolkata presentation
Chargeability [Sec. 56(1)]
Any income which is not chargeable
to tax under the heads of income –
* Salary
* House Property
* Profits and Gains of Business
or Profession
* Capital Gains
Which is not exempt as per Act
Conditions must be satisfied
There must be an income;
Such income is not exempt under the
provisions of this Act;
Such income is not chargeable to tax under
any first four heads viz., “Income from
Salary”, “ Income from House Property”,
“Profits and Gains from Business or
Profession” and “Income from Capital Gains”.
Income from other sources
is, therefore, a residuary
head of income.
It Includes, u/s 56(2)
Dividends;
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;
Any sum received from employees by the
employer-assessee towards contribution to any
provident fund or superannuation fund;
Income by way of interest on securities, if the
income is not chargeable as business income;
…….Includes
Income from letting out of machinery, plant or
furniture, if the same is the not chargeable under the head “
Profits and Gains from Business/Profession”;
Income from letting on hire machinery, plant or
furniture and also buildings,
which is inseparable from the letting of the said machinery, plant or
furniture and the same is not chargeable to Income-Tax under the
head “ Profits and Gains from Business/Profession;
Any sum received under Keyman Insurance Policy.
…….Includes
Shares issued at a particular price by
a privately held company, which is
greater than Fair Market Value (FMV),
the amount received in excess of FMV
is chargeable to tax under the head
“Other Sources”
…….Includes
Any sum exceeding Rs. 50,000/- received
without consideration by an individual or a HUF
from any person other than the following persons:
– A relative; or
– On the occasion of marriage of the individual;or
– Under a will or by way of Inheritance; or
– In connection with the death of the payer.
“Relative” means -
(i) spouse of the individual;
(ii) brother or sister of the individual;
(iii) brother or sister of the spouse of the individual;
(iv) brother or sister of either of the parents of the
individual;
(v) any lineal ascendant or descendant of the individual;
“Relative” means
(vi) any lineal ascendant or descendant of the
spouse of the individual;
(vii) spouse of the persons referred to in clauses
(ii) to (vi).
Exercise
Mr.X has received gift of Rs. 50,000 in cash from his friend
Mr.X has received gift of Rs. 2,50,000 in cash from his brother
Mr.X has received gift of Rs. 2,50,000 in cash from his
mother’s sister
Mr.X has received gift of Rs. 2,50,000 in cash from his father’s
brother
Mr.X has received gift of Rs. 2,50,000 in cash from his cousin
Mr.X has received gift of Rs. 2,50,000 in cash from his
grandfather
Exercise
Mr.X has received gift of Rs. 50,000 in cash from brother of his
spouse
Mr.X has received gift of Rs. 2,50,000 in cash from spouse of
his brother
Mr.X has received gift of Rs. 2,50,000 in cash from husband of
his sister
Mr.X has received gift of Rs. 2,50,000 in cash from sister of his
brother’s wife
Mr.X has received gift of Rs. 2,50,000 in cash from sister of his
spouse
Mr.X has received gift of Rs. 2,50,000 in cash from friends on
the occasion of his marriage
No. of
Different categories Tax treatment
transactions
1. Any sum If more than Rs.50,000 All transactions
2. Immovable property If stamp value more than
Single transactions
without consideration Rs.50,000 ; Stamp Value
3 Immovable property If stamp value more than
with consideration less Rs.50,000 ;Stamp value - Single transactions
than stamp value consideration
4. Movable property If Fair Market value more than
All transactions
without consideration Rs.50,000 ; Fair Market Value
5. Movable property with
If Fair Market value more than All transactions
consideration less
Rs.50,000 ; Fair Market value
than Aggregate Fair
minus the consideration
Market value
Movable i) shares &
Property securities
ii) Jewellery
iii) Gold
iv) archeological
collections
v) drawings
vi) paintings
vii)sculptures or
viii) any work of art
Income in the form of interest from
bank deposits and other deposits are
normally chargeable under the head
“ Income from Other Sources”.
Family pension received by any member of
the family of the deceased employee is
chargeable under this head.
Exceptions:
Family pension received by any member of the
family of an individual who has been in service of
the Central or State Government and has been
awarded gallantry award as may be specified, is
exempt from Income Tax [Sec.10(18)(i), CBDT
notification 24-11-2000].
Family Pension received by the widow or
children or nominated heirs, as the case
may be, of a member of the armed forces
(including paramilitary forces) where the
death of such member has occurred in
the course of operational duties, in such
circumstances as may be specified, is also
exempt from Income Tax [Sec.10(19)].
Besides…….
The following items of income are also chargeable
to Income Tax under the residuary head:
Income from sub-letting’
Income from royalty (if such income is not from
a business or profession);
Agricultural income received from outside India;
Annuity payable under a will, contract or trust
but not annuity payable by employer which is
chargeable under the head “salaries”;
Director’s fee
Besides…….
Director’s commission for underwriting
shares of new company;
Director’s commission for standing as a
guarantor to bankers;
Rent of plot of land;
Remuneration received from a person
other than the employer;
Salaries payable to a Member of
Parliament;
Income from undisclosed sources;
Besides……
Commission earned by
LIC / Postal/UTI agents are
taxable as income under the
head “Other Sources”.
Besides…….
Annuity payable to the lender of a ‘trade mark’;
Casual income;
On retirement, interest on employee’s contribution to
unrecognized provident fund (amount in respect of
employer’s contribution along with interest thereon is
taxable as salary);
‘Deemed Dividend’ as provided in Section 2(22).
Besides…..
Unexplained cash credits;
Unexplained cash credits are
generally added as income under
the head “Other Sources”
Deductions Allowable
U/s. 57
Any reasonable sum paid by way of
commission/remuneration to a banker or any
other person for the purpose of realising any
income arising from dividend or interest
chargeable under this head.
Any amount received from employees towards
contribution to provident fund or
superannuation fund, to the extent the same is
deposited in the approved fund before the due
date as specified u/s. 36(1)(va).
Deductions Allowable
U/s. 57
Deduction on account of rent, rates,
repairs and insurance of building,
repairs and insurance of machinery,
plant and furniture and depreciation on
such assets shall be allowed from
income from letting out of assets
offered to tax under the head “ Income
from other sources”.
Deductions Allowable …
Any other revenue expenditure
spent wholly and exclusively for
the purpose of earning such
income.
Deductions Allowable …
In the case of Income in the nature of Family
Pension, a deduction of a sum equal to One-third
of such income or Rs. 15,000/-, whichever is
less.
[Rs 25000 or 1/3rd whichever is less under
115BAC from A.Y. 2025-26
Deductions Not Allowable
(Sec. 58)
Any personal expenses of the
assessee;
Any interest chargeable under this
Act which is payable outside India on
which tax has not been paid or
deducted;
Any payment which is chargeable
under the head “Salaries”, if it is
payable outside India without
payment of Tax thereon;
Deductions Not Allowable
U/s. 58
No deduction in respect of any
expenditure or allowance in computing the
Income from Other Sources by way of any
winnings from
– Lotteries,
– Crossword puzzles,
– Races including Horse races,
– Card games and other games of any
sort ,
– Gambling or Betting of any form or
nature, whatsoever
Let’s work out
Mr P received the following during the F.Y. 2024-25
Cash gift of Rs. 51,000 on his birthday from a friend Mr Q
50 shares of ABC Ltd, the FMV being Rs. 1,50,000 on the date
of transfer, which Mr Q purchased at Rs. 1,00,000 on 16-08-
2022
Purchased land from his sister’s husband for Rs. 15,00,000,
SDV of which was 25,00,000 on the date of transfer
Gift from his sister in USA worth Rs. 3,00,000
Gift from fiancé Rs. 1,25,000
Some points …………
Deferred dividend is taxable in the year it is
declared [Cir No: 210 dt 25.02.77]
Award to a professional sportsman is taxable.
If he is not a professional, it is not taxable
[Cir No:447 dt 22.01.86]
Some points …………
Lump sum payment made gratuitously or as a
compensation or otherwise to widow or legal heirs
of an employee of Central/State Government,
Local Authority, Public Sector Undertaking who
dies while in service, is not taxable .
[Cir No: 573 dt 21.8.90 & 776 dt 8.6.99]
