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Income from other

sources
Income from other sources is a residual category
used to classify income that is not
classified taxed under any other head of income.
Income from other sources must be calculated
by the taxpayer based on the mercantile system
used by the taxpayer, i.e cash basis or accrual
basis. In this article, we look at income from
other sources in detail along with list of allowed
deductions.

Items Classified as Income

from Other Sources
Apart from income that cannot be classified
under any other heads, there are certain types of
incomes which are always taxed under income
from other sources. Such incomes are as under:

Dividends are always taxed under

income from other sources. However,
dividends from domestic company are
normally exempt from tax, as the
company declaring dividend pays
dividend distribution tax.
Winnings from lotteries, crossword
puzzles, races including horse races,
card game and other game of any sort,
gambling or betting of any form is
classified as income from other
sources.
Interest received on compensation or
on enhanced compensation is
taxed under the head “Income from
other sources”.
Gifts received by an individual or HUF
(which are chargeable to tax) are also
taxed under this head.

The following types of income can be classified

as Income from Other Sources, if it is not taxed
under the head “Profits and gains of business
or profession”:

Any contribution to a fund for welfare

of employees received by the
employer.
Income received by way of interest on
securities.
Income from letting out or hiring of
plant, machinery or furniture.
Income from letting out of plant,
machinery or furniture along with
building; both the lettings are
inseparable.
Money received under a Keyman
Insurance Policy including bonus.

Tax Deduction Allowed for

Income from Other Sources
The following deductions can be claimed while
computing income from other sources:

Commission or remuneration for

realizing dividends or interest on
securities.
Any sum received by an employer from
employees as contribution towards any
welfare fund of such employees is first
included as income of the employee,
and if the employer credits such sum to
the employee’s account under the
relevant fund on or before the due date
(of such fund), then such amount (i.e.,
employee’s contribution) is deductible
from the income of the employer.
Current (not capital) repairs, insurance
premium and depreciation in respect of
plant, machinery, furniture and
buildings are deductible from rent
income earned by letting out of plant,
machinery, furniture and building,
which are chargeable to tax.
A deduction of lower of Rs. 15,000 or 33
1/3% of such income is available in case
of income in the nature of family
pension (i.e., regular monthly amount
payable by the employer to the family
members of the deceased employee).
Deduction is available in respect of any
other expenditure (not being in the
nature of capital expenditure) laid out
or expended wholly and exclusively for
the purpose of making or earning such
income during the relevant previous
year.

Tax Deduction NOT Allowed

The following deductions cannot be claimed
while computing income from other sources:

Personal expenditure
Interest chargeable and payable
outside India on which tax has not been
paid or deducted at source.
Amount paid which is taxable under
the head “Salaries” and payable
outside India on which tax has not been
paid or deducted at source.
Sum paid on account of wealth-tax
that is not deductible.
Amount specified under section 40A is
not deductible.

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Guru Gobind Singh Maharshi Dayanand

Indraprastha University (MDU) BBA
University (MBA) Notes
Notes Read BBA Syllabus
Read MBA Syllabus wise notes of
wise notes of MDU,HARYANA
GGSIPU,New Delhi 6 Apr 2019
20 Dec 2018 In "MDU BBA NOTES"
In "GGSIPU MBA
NOTES"

Guru Gobind Singh

Indraprastha
University (BBA) Notes
Read BBA Syllabus
wise notes of
GGSIPU,New Delhi
9 Feb 2019
In "GGSIPU BBA
NOTES"

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