INCOME FROM OTHER SOURCES AND ITS COMPUTATION

• Basis of Charge: The following incomes are always taxable under the head
‘Income from Other Sources’

• Dividend income • Casual income • Sum received by assessee from his employees as contributions to any staff
welfare (If not taxable under the head ‘Profits and Gains from Business/Profession Income’)

• Interest on Securities
• Income from machinery, plant or furniture let on hire

Gift received above Rs 25.• Income from letting of plant. where the letting of building is inseparable from letting of plant. machinery or furniture • Sum received under Keyman Insurance Policy including bonus • Any sum of money received without consideration.000 or more. i e. machinery or furniture along with building. the whole of such amount is taxable • Residuary incomes – Income not falling under any other head. .

. cover the meaning of Residuary Income • There is Income • Income is not exempt from tax • Income is not covered by any other heads • Method of Accountancy – If books of accounts are kept on mercantile system.• Residuary Income – The following are the conditions. then. then income is taxable on ‘receipt’ basis and expenditure is deductible on ‘payment’ basis. income is taxable and expenditure on ‘due’ basis and if books of accounts are kept on cash basis. if satisfied.

winnings from betting. Hence. crossword puzzles. card games and games of nature of gambling. winnings from races.• Computation of each Income • Winnings from lotteries. races. crossword puzzles. if a receipt is not a ‘winning’ then it is not chargeable to tax.Winnings from lotteries. etc are chargeable to tax. crossword puzzles etc are . betting or of similar nature. horse races and card games etc • i) Taxability . chargeable to tax at flat rate of 30% (plus surcharge plus education cess) on Gross Winnings ( without claiming any expenditure/allowance) • ii) • iii) Tax rate – So. races including horse races. is chargeable to tax under the head ‘Income from Other Sources’ Only Winnings from lotteries. Winnings from lotteries.

gambling or betting Net Amount 1 – (0. in case of given ‘Net Winnings’ Source Mode of Conversion Net winnings from lotteries card games horse races or other games etc Winnings from other races. there is no difference between net and gross amounts .30 + surcharge + education cess) As no tax is reqd to be deducted.• iv) Table showing Grossing up process.

corporation established by Central. if assessee maintains books on cash basis or Interest is taxable on ‘accrual’ basis if assessee maintains books on mercantile basis. State or Provincial Act • ii) Basis of Charge – Income in form of Interest on Security is taxable on ‘receipt’ basis. Net Interest is grossed up if TDS has been deducted at source. • iii) Grossing up Interest – Gross interest (Net Interest + TDS ) is taxable.• Interest on Securities • i) Interest on security – means • interest on any security of Central/State Government • interest on debentures or other securities for money issued by or on behalf of a local authority. • Grossing up Process = Net Interest x 100 • 100-TDS Rate . company.

• Generally. high-income class assessee adopt this to evade tax. .• Bond Washing Transaction :• A transaction involving selling securities (to a friend or relative) before due date and acquiring back the same (or similar) securities after due date of interest is over.

plant or furniture.• Sales cum interest – • a. Income from machinery. If an assessee having beneficial interest in securities sells them in such a way that either no income is received or income received is less than sum he would have actually received. • b. Exceptions – If there has been no avoidance of Income Tax or the avoidance of Income Tax was exceptional and not systematic and there was no avoidance of Income Tax during 3 preceding PY’s • c. is chargeable to tax under the head ‘Income from Other Sources’ . plant or furniture let on hire – The hire charges received/receivable on letting out of machinery.

Composite letting out charges is not taxable under this head of Income. Income from composite letting of building. and hence composite letting out hire charges is chargeable to tax under the head ‘Income from Other Sources’ • (ii) If building is let out but other assets like plant. machinery or furniture. inseparable from plant. machinery or furniture – (i) Hire charges received/receivable on letting out of building. then. air-conditioning service are provided. . plant. machinery or furniture are not given on rent but certain facilities like lift service.• d.

Receipts without consideration to be treated as income (Gift) - Applicable for Individual or HUF Receipt amount is greater than Rs 25000 Transfer has taken place on or after Sept 2004 Sum received does not fall in exemption list Exceptions Money received before Sept 2004 Money received by way of consideration Money received from a relative Money received on occasion of marriage of individual Money received under a will or inheritance Money received under a contemplation of death of payer Money received is not exceeding Rs 25000. .• • • • • • • • • • • • • e.

lineal ascendant or descendant of Individual/Spouse . Brother/Sister of parents of Individual.• Note – Meaning of relative – Spouse. Brothers/Sisters of Individual. Brother/Sister of Spouse.

deposit certificates and bonus to preference shareholders • c. debenture-stock. Any distribution entailing release of company’s assets • b. holding substantial interest. . Dividend • Meaning – Amount paid to or received by a shareholder in proportion to his shareholding in a company out of total sum so distributed • Following payments are deemed as dividend – • a. Any distribution of debentures.• f. Any distribution on liquidation of company • Any distribution on reduction of capital • Any payment of loan or advance by a closely held company to a shareholder.

• Taxability:• i) Dividend received from a domestic company – Is not taxable • ii) Dividend received from a non-domestic company – Is taxable • iii) Dividend covers Normal dividend. Deemed dividend or Interim dividend. .

Module-II Deduction and Exemptions Computation of Tax Liability • DEDUCTIONS TO BE MADE IN COMPUTING TOTAL INCOME • • • • In computing the Total income of an assessee. Gross Total Income means the total income computed in accordance with the provisions of the act. the deductions specified from sections from be allowed from companies Gross Total income. before making any deduction given here. . However Brought forward losses shall be deducted from the income to arrive at the gross total income. The deduction in this chapter are not allowed against short term capital gains and long term capital gains.

. 4) 80JJAA.• • • • • • Persons entitled to deductions: Only Companies are entitled to deduction under the following sections: 1) 80GGB 2) 80I-A: (a) Infrastructure facility (b) Telecommunication services. 3) 80I-B:(a) Hotel. (b) Scientific and Industrial research and development. • 5) 80LA.

6) 80-IB . 5) 80-IAB 10) 80JJA.• • All assessees are entitled to deduction under the following sections except as mentioned in (2) and (3) of company. 1) 80G 7) 80-IC 2) 80GGA 3)80GGC. 4)80IA. 8) 80-ID 9) 80-IE.

for business or scientific or statistical profession.DEDUCTIONS REGARDING CERTAIN PAYMENTS AT A GLANCE Persons entitled s/l Section to deduction Quantum of Deduction 100% of qualified Specified Donations of national Importance. 50% of other qualified donations Payment Regarding Payment Regarding charitable donation to approved funds or institutions Conditions for deduction Payment to be done in the form of Money only. or to a No income from 100% of amount paid. university or college etc. 1 80G All Assessees 2 80GGA All Assessees Payment to scientific Research Assn. research or RDP Whole Amount Contribution to political party Contribution to political party --- 3 80GGB Indian Company Assessee except local 4 80GGC authority/person funded by Govt Whole Amount --- .

Deduction in respect of profits and gains by an undertaking or enterprise engaged in development of Special economic Zone.Eastern States.Deduction in respect of profits and gains from business of Hotels and Convention centre in specified area. • • • • • Quantum of deduction 100% of the profit.Deduction in respect of profits and gains from undertaking or enterprise in Special Category States. Quantum of deduction 100% of the profit. 80ID:. Quantum of deduction 100% of the profit. 80IC:.• • • 80-IAB:. Quantum of deduction 100% of the profit. 80IE:. .Deduction in respect of profits and gains in respect of certain undertakings in North.

Quantum of deduction 100% of the profit. . 80LA:.Deduction in respect of profits from Business of collecting and processing of biodegradable waste. 80JJAA:.Deduction in respect of certain incomes of offshore Banking units or International Financial Services Centre.For an Indian company engaged in the manufacture or production of article or thing Deduction in respect of employment of new workmen.• • • • • • • 80-JJA:. Quantum of deduction 30% of additional wages paid to the new regular workmen employed by the assessee during the previous year. Quantum of deduction 100% of the profit.

card games etc iv) Any other income 30% 30% Surcharge @ 10% if total income exceeds one crore rupees. . races. • Education cess @ 3%.Computation of Tax on Companies • The rates of income tax for assessment years 2009-10 and 2010-11 are as under:- • • • I. In case of Domestic Company:i) Short term capital gains ii) Long term capital gains 15% 10%/20% • • • iii) Winnings from lotteries.

1976 but before 1. 1961.2005 30% 20% 10% • • • • • • .1997 but before 1.• • II.1997 b) after 31.5. In the case of a company other than a domestic company i) On income from royalty received from Government or an Indian concern in pursuance of an agreement made after 31st March. 1976 50% ii) On income from fees for rendering technical services received from Government or an Indian concern in pursuance of an agreement made after 29th Feb.6. but 1st April.1963 but before 1st April.5.6.2005 c) after 31. 1976 50% iii) Royalty or fee for technical services: If agreement made: a) after 31.3.