Income from other sources means any income other than Income from Business or Profession, Income from House Property, Capital Gain and Income from Salary.
Following are some cases of income which are booked under the head ‘Income from Other Sources’ for taxation purpose:-
- Interest from investments in taxable bonds.
- Interest from investment in debentures.
- Interest from securities deposits with suppliers or customers.
- Interest from securities deposits with various government departments.
- Interest from customers on account of overdue payment.
- Interest from suppliers on advance payments.
- Dividend other than the dividend subjected to dividend distribution tax under section 115-O.
- Income from crossword puzzles, horse races, card games, television game shows and other entertainment programmes in which people win prizes.
- Contribution received by an employer from his employees if not deposited in the relevant account and not charged under the head of ‘Profit and Gains of Business or Profession’.
- Income from Lottery.
- Rent from plant and machinery, furniture let on hire.
- Rent from plant or machinery or furniture let on hire alongwith buildings, where letting is inseparable and the income in not taxable under the head ‘Income from Business or Profession.
- Any sum including bonus received under the Keyman Insurance Policy which is not taxable under the head ‘Salaries’ or ‘Profit and Gains of Business or Profession).
- Any gift by way of shares, securities, jewellery, drawings, paintings, work of art, any immovable property or cash gift without any consideration, exceeding Rs.50,000/= received by individual or Hindu Undivided Family from any person.
- Interest received on compensation/enhanced compensation. The amount received under this head shall be taxed on receipt basis only.
- Repayment of annuity deposit.
- Rent from sub-letting.
- Interest on fixed deposits, received from Banks.
- Interest received on personal or other loan, given to any one.
- Interest from Saving bank accounts.
- Interest from Post Office Monthly Income Scheme.
- Interest received from National Saving Certificates (Accrued or otherwise).
- Interest from Kisan Vikas Patra.
- Any withdrawals under National Saving Scheme including interest.
- Premium on redemption of debentures.
- Income of a beneficiary of a trust.
- Income from agricultural land outside India.
- Payment from unrecognized fund insofar as it relates to interest on employee’s contribution.
- Family pension paid by employer the a family of the deceased employee.
- Rent of plot or ground.
- Insurance commission.
- Any casual income.
- Salary received by a member of Parliament.
- Interest on tax refunds.
- Income from any undisclosed sources.
- Income from letting out any space for hoarding or advertisements etc.
- Interest on share application money.
Allowable Expenses Which can be Claimed from Income From Other Sources Under Section 57
Following are the expenses which can be claimed from the income from other sources:-
- Commission paid to any broker for collection of dividend or interest etc.
- Amount spent on repair of building, plant and machinery and furniture etc. which are let out.
- Insurance premium paid for building, plant, machinery and furniture which are let out.
- Depreciation is also allowed under section – 32.
- In case of family pension, a deduction of one third of such income or Rs.15000/= whichever is less.
- Any other expenses incurred to gain the related income.
- Any allowance or expenses in connection with the activity of owning and maintaining race horses.
Expenses not Deductible in Respect of Income from Other Sources
- Any personal Expenses.
- Any interest paid outside India on which tax has not been paid or deducted at source.
- Any amount of Wealth Tax paid.
- Any salary paid outside India n which tax has not been paid or deducted at source.
- Any payment made to any relative or close person. which seems unreasonable.
- Any payment made to any person exceeding Rs.20000/= in cash in a day. In case of transport companies the amount exceeding Rs.35000/= paid in cash in a day.
- Any expenses in connection with income from crossword puzzles, lotteries, races including horse races, card games and gambling etc.
- With effect from 01.04.17, 30% of any sum payable to a resident, on which tax has not been deducted or after deduction not deposited on or before the due date date for filing return under section 139(1). However, where in respect of any such sum, tax is deducted in any subsequent year, or is deducted during the relevant previous year but paid after the due date for filing of return under section 139(1), 30% of such sum shall be deductible in the previous year the tax is deposited.
- With effect from 01.04.17, any expenditure in respect of which payment or aggregate of payments to a person in a day, otherwise than by an account payee cheque/draft/RTGS/ECS exceeds Rs.10000/= (Rs.35000/= in case of payment made for plying, hiring or leasing goods carriages), except when such payment is covered under rule 6DD. In Financial year 2016-17, the payment of expenditure in cash to a person in a day was allowed up to Rs.20000/= however, In case of payment made for plying, hiring or leasing goods carriages the limit was Rs.35000/=.
Mr. A submits the following details in respect of financial year 2017-18 (assessment year 2018-19). Compute the taxable income and tax payable.
|1||RENT FROM PLANT & MACHINERY||100000|
|2||Collection charges in respect of rent||2000|
|3||Repair of machinery||6000|
|4||Depreciation of plant and machinery||8000|
|5||Insurance premium of plant and machinery||4000|
|6||INCOME FROM SUBLETTING OF OFFICE||40000|
|7||Rent paid for above office||30000|
|8||Interest from fix deposits with bank||8000|
|9||Interest from taxable bonds||6000|
|10||Interest from share application money||2000|
|11||Interest from income tax refund||4000|
|12||WINNING FROM LOTTERY||100000|
|13||TDS in respect of lottery income||30000|
|COMPUTAION OF TAXABLE INCOME|
|INCOME FROM OTHER SOURCES|
|Amount in||Amount in||Amount in|
|A||RENT FROM PLANT & MACHINERY||100000|
|Less Expenses under section 57|
|Collection charges in respect of rent||2000|
|Repair of machinery||6000|
|Depreciation of plant and machinery||8000|
|Insurance premium of plant and machinery||4000||20000||80000|
|B||INCOME FROM SUBLETTING OF OFFICE||40000|
|Less Expenses under section 57|
|Rent paid for above office||30000||30000||10000|
|C||INCOME FROM INTEREST|
|Interest from fix deposits with bank||8000|
|Interest from taxable bonds||6000|
|Interest from share application money||2000|
|Interest from income tax refund||4000||20000|
|D||WINNING FROM LOTTERY||100000||100000|
|Total Taxable Income From Other Sources||210000|
|COMPUTATION OF TAX LIABILITY|
|Tax payable on winning from lottery|
|On Rs.100000/= 30%||30000|
|Tax payble on balance of total income||NIL|
|(Rs.210000 minus Rs.100000 = Rs. 110000/=|
|Less: Rebate u/s 87A||2500|
|Income tax payable||27500|
|Add: Education Cess 2%||550|
|Add: Secondary & Higher Education Cess 1%||275|
|Total tax payable||28325|
|Less: TDS on lottery winnings||30000|
|Net Tax Refundable||1675|
Tax rebate is available to resident individuals who have total income up to Rs.3.50 lakh, under section 87A, equal to the amount of tax or Rs.2500/= whichever is less.