The last head is a category of residuary incomes, which are

receipts of earnings that cannot be classified under any other

heads of income.

Let’s gather an overview of incomes that are generally

taxable under the head, ‘income from other sources’:

Dividends are reported under the head ‘income from other

sources’ and are taxed under Section 56(2)(i) of the ITA. This is
based on the residential status of the source company that
paid out the dividend

One-time income earned from winning lotteries, crossword

puzzles, and races, including horse races, card games,
gambling, or betting. These incomes are chargeable to tax at
a flat rate of 30% and cess at 4%

The amount an employer receives from his employees as a

contribution towards provident fund (PF), employees’ state
insurance (ESI), and superannuation fund, among others. Such
an amount will be taxable if the employer does not credit the
amount received from the employee towards the respective
funds’ account.

Income received as interest on securities (Section 56(2)(id))

Advance money received or money received in negotiation for

transfer of a capital asset (provided the money is forfeited
and it doesn’t result in the transfer of such asset)

Income from letting out of plant, machinery, or furniture

belonging to a taxpayer (Section 56(2)(ii))

Income from renting out machinery or furniture with buildings,

where such letting is inseparable(Section 56(2)(iii))
 Any sum received under Keyman insurance policy, including
bonus (Section 56 (2)(iv))

As per Section 56(2)(viib) of the ITA, when a privately held

company issues shares at a particular price, which is greater
than Fair Market Value (FMV), tax is chargeable to the amount
received in excess of FMV

Tax on Gifts Received under

Section 56(2)(x)
Gifts received in the form of cash (cheque, online transfer,
fixed deposit, demand draft or any other form) and cash
equivalents or property (moveable or immovable) or in-kind
during a financial year are taxable. As per Section 56 (2)(x) of
the Income-tax Act, 1961 (ITA), you are required to pay taxes if
the gift value is greater than Rs 50,000. While gifts received
up to Rs 50,000 are completely tax-free, if this limit is crossed,
the whole amount of gifts received becomes taxable in the
hands of the recipient.

The aggregate value of gifts received during the financial

year is taken into account for taxability and it is not based on
individual gift. In a case where the aggregate value of gifts
received during the year is greater than Rs 50,000, the
aggregate value of these gifts will be charged to tax.​For
example, an individual received gifts worth Rs 15,000 on April
1, 2021, and Rs 40,000 on March 31, 2022. In this case, the
entire Rs 55,000 is taxable under Section 56(2)(x), as the
aggregate value of gifts exceeds Rs 50,000 during a financial
year under the head ‘income from other sources’.
Similarly, a gift in cash from an employer is fully taxable in the
hands of the employee under the head of salaries, as per the
ITA. However, in the case of a gift received in kind, the
amount is fully taxable if the value exceeds Rs 50,000.

Tax on Property Transactions

under Section 56(2)(x)
Any property transaction (movable and immovable) has
income tax and stamp duty implications. 

In the case of any immovable property, which could be land

and building or both, received without consideration (without
paying anything for it), the stamp duty value (value adopted
by the authorities for payment of stamp duty) of which
exceeds Rs 50,000. The full stamp duty value of such
property will be taxable in the hands of the beneficiary. 

On the other hand, if the property is received for

consideration and the stamp duty value of such property
exceeds Rs 50,000 or 10% of the consideration, then the
stamp duty value in the excess of consideration will be
taxable as income in the hands of the buyer.

Note: As per the Finance Act, 2021, the rate of variation

allowable between the stamp duty value and actual sale
consideration value, has been raised from 10% to 20%.
However, the said provision was invoked for the period 
November 12, 2020, to June 30, 2021, in the case of residential
properties costing up to Rs 2 crore. In other cases, the rate of
variation allowed is 10% of the consideration.
Movable property such as jewellery, gold, shares, securities,
archaeological collections, drawings, paintings, sculptures,
any work of art, and bullion, among others, when received at
a reduced price or without consideration, the aggregate FMV
of which is greater than Rs 50,000, the aggregate FMV falls
under the tax ambit. However, for a consideration, which is
less than the aggregate fair market value of the property by
an amount exceeding Rs 50,000, the entire excess fair market
value will be taxable.

Exemptions under Section 56

(2)(x)
In case if a relative offers a gift, it is exempt from tax under
Section 56(2)(x). According to the ITA, the following persons
are considered relatives: spouse, brother/sister, brother/sister
of the spouse, brother/sister of either of the parents, any
blood relative/offspring, any blood relative/offspring of the
spouse, spouse of the individuals referred above. For a Hindu
undivided family (HUF), any member thereof.

Friends, however, are not included in the list of relatives, so

any gifts received from them are taxable.

Further, gifts that a couple receives during their marriage are

tax exempted. At the same time, gifts that an individual gets
on occasions such as a birthday or anniversary remain
taxable.​​

On the other hand, gifts received under a will or by way of

inheritance and gifts received in contemplation of the death
of the donor (for example, a terminally-ill person anticipating
death in the near future) are also tax-free.
The income tax provision of taxation of gifts will not be
applicable if any sum of money or property is received from:

Any local authority, as per  Section 10(20) (defines what kind

of income is exempt from tax) of the ITA

Fund/foundation, university/other educational institution,

hospital/other medical institution, and  trust/institution
referred to in Section 10(23)

Trust/institution that is registered under Section 12A, Section

12AA or Section 12AB

Fund/ trust/institution, university/other educational institution

and hospital/other medical institution as per Section 10(23C)

The transaction, which is not regarded as transfer under

Section 47, or from any individual by a trust that is
created/established with the sole intention to benefit the
relative of the individual

Tax Relief in the Aftermath of

Covid-19
The Finance Act, 2022 introduced amendments to Section 56
(2)(x) to provide tax relief to taxpayers to tide over the Covid-
19 health crisis during the financial year 2019-20 and
subsequent years. As per the amendment, the amount
received from the employer or any well-wisher for COVID-19
treatment is tax-free. Further, money received by the family
members from the employer or any other person in case of
demise of a breadwinner of the family will be exempt from