The Income which is not Chargeable to Tax come under this head Income From Other Sources. Here other sources of Income includes income, profits and gains from the total income of Assessee. It is one of the five heads of Income Tax.
The following conditions which must satisfy under the residuary head of Income:
- This income should not be exempt under the IT Act 1961.
- There must exist an income.
- This income shall not be charged to tax if it is under the other heads of income like House property, Salary, Capital Gains, and Business or Profession.
These are some of the examples which are taxable under this head Income from Other Sources:
- Company deposits or Interest on bank deposits.
- The pension which is received by legal heirs of an employee.
- Income obtained from Dividend under that is covered by Sections 2(22)(a) to (e).
- The income received from an agricultural land situated outside the Country.
- Income from sub-letting of house property by a tenant.
- Salary received by the Members of Parliament.
- Receipts of non-recurring nature and on Casual receipts.
- Interest received on delayed refunds from IT Department.
- Commission obtained on Insurance.
- Interest on securities.
- Examiner-ship fees received by a teacher but not received from an employer.
- Income obtained from Crossword Puzzles, Winnings from Lotteries, Card Games, and Horse Races.
- Income from royalty.
- Income obtained from furniture, plant or machinery, etc.
- Any sum more than Rs. 50,000/- received without consideration shall be treated as income provided that the sum of money is not received from any relative/ on the occasion of the marriage of the individual/ under inheritance or a will etc.
Calculation of Income from Other Sources
This the process used for the Computation of Income from other sources
- Includes Expenditure incurred in the previous year.
- Expenditure incurred exclusively and wholly for the purpose of earning the income.
- Under Section 57 of the IT Act, 1961 the deductions and After deducting allowances are incurred.
After Disallowing these following:
- Personal Expenses related to Expenditure.
- Salary, Interest that is payable outside India on which Tax Deducted at Source (TDS) not made.
- Wealth Tax/ Income Tax paid excessive payments to relatives etc.
- Spending Funds in respect of Technical fees and royalty fees received by a foreign company.
- An amount spent in respect of winning from the Lottery, Horse Races and Card Games, etc.
Expenditure allowed as Deductions for computing income under head Income from Other Sources:
- Deductions are available under Section 57(i) that is Remuneration or Commission for realising interest or dividends on securities.
- Insurance Premium, Current repairs and depreciation in respect of Machinery, Furniture, Building, and Plant that are chargeable to tax under section 56(2)(ii)/(iii) are deducted.
- An amount of Rs 15,000 or 33.5% is deductible if the source of income is through a family pension.
- The Deduction is available on any other expenditure if it is not in the nature of capital expenditure.
- If the taxpayer receives any sum as a contribution towards any welfare fund from his employee’s then such amount is allowed if it is credited to the employee’s account in the relevant fund by the taxpayer before the due date.
Amount not allowed as Deduction
The amounts that are not allowed as deduction is clearly mentioned in Section 58 under head Income From Other Sources. The expenditures which are not considered as a deduction are given below.
- Any Interest, which is payable outside India on which tax at source is chargeable under Act, is not deductible.
- Any expenditure spent for personal uses of the assessee will be not deducted.
- The Sum, which is paid on wealth tax, is not deductible.
- According to Section 40A, any amount is not deductible while computation of income under the head Income From Other Sources.
- Spending Funds in respect of winnings from lottery, Card games are not deductible.