Income from Other sources

Income which are taxed under other heads of income like income from salary, income
from house property, income from business, income from capital gain. The income
which are not taxed under these any kind of heads of income are taxed under this head
of income from other sources so it is called as other source income or residual income.
Income which are not earned as salary, from business, from properties owned are
treated as other source because the source of income is not regular or casual.
Speculation transaction which are made at stock exchange is an example of other
source because income is earned from non-regular business. If assessee keeps
mercantile system of accounting, income which are chargeable under the head are
taxed on due basis. If assessee keeps cash system of accounting, income which are
chargeable under the head are taxed on receipt basis.

Some Incomes are falling under the head income from

other sources
Sec.56(2) and other examples of income which are falling under the head income from
other sources are followed.

1. Dividend

2. Interest on Securities

3. Interest on bank deposit

4. interest on foreign securities

5. Income form horse race, bedding, gambling, card game, lottery

6. Income from letting of plant, machinery,and furniture

7. Income from letting of plant, machinery,and furniture along with building.

8. Income from subletting

9. Ground rent

10. Agricultural income of land which is situated in foreign country

11. Gift which exceeds Rs.50000/- in monitory value

12. Insurance commission

13. Royalty income

14. Directors' commission

15. Exam paper correcting charge which is received by the teacher

16. Pension which is received by family members

17. Salary of MLA, MP

18. Casual income

19. Income from undisclosed sources

20. Rent of plot of land

Provision regarding Dividend

Dividend it paid by a company to the shareholder who possess shares of the company.
Dividend is a return to the purchasers of shares. On every year ending, dividend which
is declared to the shareholders is decided according to the terms which are declared
while issuing the shares.
Dividend which is received from an Indian company is not taxable in the hand of
shareholder. Dividend which is provided by the Indian company under section 2(22)(e)
is taxable in the hand of shareholder. Generally Dividend which is provided under

section 2(22)e is provided to the shareholder who has provided loan to the company. In
return to the loan which has been provided by the shareholder, such dividend is issued
to them u/s 2(22)(e). If we get loan from any one, we provide them in return as some
gifts, Jewell, etc., instead of interest so the company provides dividend instead of
interest to the loan givers as well as shareholders.
Dividend which is received from a foreign company is taxable in the hands of
shareholder. Dividend which is received from a foreign or Indian company by a cooperative society is taxable.

provision regarding Gift

Gift which is provided by one person to another person without any considerations is
income under the head income from other sources so it is taxable. Some provisions are
applicable to tax the gift as income.
If gift which is received after ist april, 2006 is taxable and some provisions are
applicable. The gift should be received by an individual or HUF. If the gift which exceeds
Rs.50000/- in monetary benefit is chargeable to tax entirely.
If the gift which is received from relatives i.e. spouse, brothers, sisters, parents, brotherin-law, sister-in-law, father-in-law, mother-in-law is not taxable. If the gift which is
received on the occasion of marriage, by will, in contemplation of death is not taxable.
Gift which is received from a local authority is not taxable.

Provision regarding interest on securities

Government or other organisation issue securities other than shares which provide
some amount as interest in return to securities' holders.Issuing securities is an another
way of getting loan from public so interest is paid in return to such loan.
TDS is charged on the interest on securities which has given by the company. When we
calculate the taxation of interest on securities, the grossed up amount which includes
TDS is entirely taxable. There are two types of securities. They are tax free security and
taxable security. Taxable security only attract TDS so it is necessary to gross up the net
amount of tax free security. Generally they provide the net amount after deducting the
TDS from it so we have to gross it up by reverse calculation. If a listed security which is
recognized by stock exchange and unlisted securities are taxed at 10% of TDS.
Therfore, the net amount is divided by 90 and multiplied by 100 to gross it up.
Interest on securities is taxed on the person who holds the security at the time of
declaring such interest. When a person sells his security at a day before the date of

declaring the interest by the company or government, interest is provided to the person
who buys it.

Provision regarding Winning from lottery,card

game,bedding, gambling, horse race
30% TDS is attracted on the casual incomes, if the value of such casual income
exceeds Rs.5000/-. On calculating the taxable value of the casual income it is
necessary to gross it up and take the grossed up value as taxable casual income. The
net amount is divided by 70 and multiplied by 100 to gross it up.
sec.57 deduction of expenses which are made for realizing the income is not allowed for
the casual incomes. Any losses on casual income is not set off against the incomes of
any head. Deduction of 80C to 80U is not allowed to this income.

Deduction under section 57

Commission and remuneration which are made to receive the dividend and interest on
securities is deductible u/s 57(i). Depreciation or repairs which are made to the furniture,
plant, machinery which are let out is provided as deduction u/s 57.Rs.15000/- or 331/3%
of such income by way of pension which received by a family is deductible u/s 57.Any
expenses which are made to realize the income which come under head of income from
other sources.

Expenditure which are disallowed u/s 58

Personal expenses of assessee is not taxable in income tax act 1961. Interest which
are received from foreign company donot pay TDS is not allowed as deduction.Salary
which are received from foreign company donot pay TDS is not allowed as deduction.
Wealth tax is not taxable. Any expenditure in course of winning from lottery, card game,
other games is not allowed as deduction.