edit] Income from Other Sources

This is a residual head, under this head income which does not meet criteria to go to other heads
is taxed. There are also some speciIic incomes which are to be taxed under this head.
1. ncome by way oI Dividends
2. ncome Irom horse races
3. ncome Irom winning bull races
4. Any amount received Irom key man insurance policy an donation.
5. ncome Irom shares (dividend)
edit] Income Exempt from Tax
$ections 10,10A, 10AA, 10B, 10BA, and 13A deal with income which does not Iorm part oI an
assessee's total income. While section 10 provides a list oI income absolutely exempt Irom tax,
sections 10A, 10AA, 10B, 10BA, and 13A deal with speciIic exemptions available to newly
established industrial undertakings in Iree trade zones, and political parties. These exemptions
are provided Irom social, political, Constitutional considerations, Ior avoiding double taxation,
on the basis oI casual and non-recurring nature ,on the basis oI non-residents and non-citizens
status, on the basis oI Certain speciIic securities, bonds, certiIicates, Iunds and the like, on the
basis oI Education, science, research, achievements, rewards, sports, charity, on the basis oI
certain types oI bodies, Iunds and institutions, $ubsidies to promote business, and international,
economic, and other considerations. $ikkim is the only state oI ndia where citizens do not pay
income tax. Residents oI $ikkim are eligible Ior this exemption but excluding the non-$ikkimese
spouse oI a $ikkimese.thats why Center Gov. does not pay any revenue to $ikkim $tate Irom
ncome tax.Gujrat is number state who collect maximum revenue Irom Center report oI
2007.center Gov is now may change revenue oI state in coming year. Center Gov s liable to
pay minimum Iix revenue to state beIore next year Irom income tax collected Irom state.
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Agricultural ncome |$ection 10(1)| Eligible Assesses :- All assesses Exempt income :-
Agricultural income Other points :- Agricultural income means as it is deIined in $ection 2(1A)
n case oI individual, HUF, AOP, BO, unregistered Iirms and artiIicial juridical persons,
agricultural income is to be aggregated Ior the purpose oI determining the rate oI tax on Non-
Agricultural income and they would get tax rebate or relieI.
edit] Dividends
Dividend income (as reIerred u/s 115-O oI the .Tax Act) paid by Companies and Mutual Funds
are exempt Irom tax. A 15 dividend distribution tax and surcharge oI 3 is paid by companies
beIore distribution. Equity mutual Iunds (with more than 65 oI assets invested in equities) do
not pay a dividend distribution tax, though other Iunds do. Liquid and Money Market Iunds pay
25 dividend distribution tax.01123
edit] Other Exempt Income
The ndian ncome tax act speciIically exempts certain income Irom tax:
O Money received Irom an nsurance company as proceeds oI an insurance policy (by way
oI an insurance claim, or by maturity) is generally exempt. However there are three types
oI payments under liIe insurance policy that are not tax Iree . These are :
O any sum received under sub-section (3) oI section 80DD or sub-section (3) oI
section 80DDA - this reIers to speciIic policies Ior disabled dependants; or
O any sum received under a Keyman insurance policy; or
O any sum received under policies issued on or aIter 1 April 2003 where premium
paid is greater than 1/5th the sum assured
O Maturity proceeds oI a Public Provident Fund (PPF) account.
edit] Deduction
While exemptions is on income some deduction in calculation oI taxable income is allowed Ior
certain payments.
edit] Section 80C Deductions
$ection 80C oI the ncome Tax Act |1| allows certain investments and expenditure to be tax-
exempt. The total limit under this section is Rs. 100,000 (Rupees One lac) which can be any
combination oI the below:
O Contribution to Provident Fund or Public Provident Fund
O Payment oI liIe insurance premium
O nvestment in pension Plans
O nvestment in Equity Linked $avings schemes (EL$$) oI mutual Iunds
O nvestment in National $avings CertiIicates (interest oI past N$Cs is reinvested every
year and can be added to the $ection 80 limit)
O Payments towards principal repayment oI housing loans.Also any registration Iee or
stamp duty paid.
O Payments towards tuition Iees Ior children to any school or college or university or
similar institution. (Only Ior 2 children)or towards coaching Iee oI various competitive
exams.
Post oIIice investments The investment can be Irom any source and not necessarily Irom income
chargeable to tax.
rom April, 1 2010, a maximum of Rs. 20,000 is deductible under section 80CC provided
that amount is invested in infrastructure bonds.
edit] Section 80D: Medical Insurance Premiums
Health insurance, popularly known as Mediclaim Policies, provides a deduction oI upto Rs.
35,000.00 (Rs. 15,000.00 Ior premium payments towards policies on selI, spouse and children
and (read as in addition to) Rs. 15,000.00 Ior premium payment towards non-senior citizen
dependent parents or Rs. 20,000.00 Ior premium payment towards senior citizen dependent).
This deduction is in addition to Rs. 1,00,000 savings under T deductions clause 80C. For
consideration under a senior citizen category, the incumbent's age should be 65 years during any
part oI the current Iiscal, eg. Ior the Iiscal year 2010-11, the incumbent should already be 65 as
on March 31,2011), This deduction is also applicable to the cheques paid by proprietor Iirms.
edit] Interest on Housing Loans Section
For selI occupied properties, interest paid on a housing loan up to Rs 150,000 per year is exempt
Irom tax.(Excluding Rs.1,00,000/p.a. u/s 80c $aving) However, this is only applicable Ior a
residence constructed within three Iinancial years aIter the loan is taken and also the loan iI taken
aIter April 1, 1999.
I the house is not occupied due to employment, the house will be considered selI occupied.
For let out properties, the entire interest paid is deductible under section 24 oI the ncome Tax
act. However, the rent is to be shown as income Irom such properties. 30 oI rent received and
municipal taxes paid are available Ior deduction oI tax.
The losses Irom all properties shall be allowed to be adjusted against salary income at the source
itselI. ThereIore, reIund claims oI T.D.$. deducted in excess, on this count, will no more be
necessary.
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edit] Tax Rates
n ndia, ndividual income tax is a progressive tax with three slabs. About 10 per cent oI the
population meets the minimum threshold oI taxable income
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From April 1, 2010 new tax slabs apply, which are as Iollows:
O No income tax is applicable on all income up to Rs. 1,60,000 per year. (Rs. 1,90,000 Ior
women and Rs. 2,40,000 Ior senior citizens oI 65 and above and must be resident oI
india)
O From 1,60,001 to 5,00,000 : 10 oI amount greater than Rs. 1,60,000 (Lower limit
changes appropriately Ior women and senior citizens)
O From 5,00,001 to 8,00,000 : 20 oI amount greater than Rs. 5,00,000 34,000 ( Rs.
31,000 Ior women and Rs. 26,000 Ior senior citizens)
O Above 8,00,000 : 30 oI amount greater than Rs. 8,00,000 94,000 ( Rs. 91,000 Ior
women and Rs. 86,000 Ior senior citizens)
edit] Surcharge
$urcharge has been abolished Ior Personal income tax in the Iinancial year 2009-10.
A 7.5 surcharge (tax on tax) is applicable iI the taxable income (taking into consideration all
the deductions) is above Rs. 10 lakh (Rs. 1 million). The limit oI 10 lacs was increased to Rs. 1
crore (Rs. 10 million) with eIIect Irom 1 June 2007
All taxes in ndia are subject to an education cess, which is 3 oI the total tax payable. With
eIIect Irom assessment year 2009-10, $econdary and Higher $econdary Education Cess oI 1 is
applicable on the subtotal oI taxable income. Mainly education cess is applicable on excise duty
and service tax
edit] Tax Rate for non-Individuals
There are special rates prescribed Ior Firms, Corporates, Local Authorities & Co-operative
$ocieties.
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edit] Refund Status for Salaried tax payers
The ncome Tax Department has put on its website the list oI income tax reIunds oI all salary tax
payers which could not be sent to the concerned persons Ior want oI correct address. (link to
check reIund)
$alary taxpayers who have not received reIunds Ior assessment years 2003\04 to 2006\07 can
click on the link below and query using the PAN number and assessment year whether any
reIund due to them has been returned undelivered.
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.
edit] Corporate Income tax
For companies, income is taxed at a Ilat rate oI 30 Ior ndian companies, with a 10 surcharge
applied on the tax paid by companies with gross turnover over Rs. 1 crore (10 million). Foreign
companies pay 40.
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.An education cess oI 3 (on both the tax and the surcharge) are payable,
yielding eIIective tax rates oI 33.99 Ior domestic companies and 41.2 Ior Ioreign companies.
From 2005-06, electronic Iiling oI company returns is mandatory.
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edit] Tax Penalties
"I the Assessing OIIicer or the Commissioner (Appeals) or the Commissioner in the course oI
any proceedings under this Act, is satisIied that any person-
(b) has Iailed to comply with a notice under sub-section (1) oI section 142 or sub-section (2) oI
section 143 or Iails to comply with a direction issued under sub-section (2A) oI section 142, or
(c) has concealed the particulars oI his income or Iurnished inaccurate particulars oI such
income,
he may direct that such person shall pay by way oI penalty,-
(ii) in the cases reIerred to in clause (b), in addition to any tax payable by him, a sum oI ten
thousand rupees Ior each such Iailure;
(iii) in the cases reIerred to in clause (c), in addition to any tax payable by him, a sum which
shall not be less than, but which shall not exceed three times, the amount oI tax sought to be
evaded by reason oI the concealment oI particulars oI his income or the Iurnishing oI inaccurate
particulars oI such income