Income from Other Sources

Income from Other Sources is one of the heads of

income chargeable to tax under the Income tax Act.
1961.
Any income that is Click
nottocovered
add text in the other four heads
of income is taxable under income from other
sources, because of this, it is known as residuary
head of income.
All the incomes excluded from salary, capital gains,
house property or business & profession (PGBP) are
included in IFOS, except those which are exempt
under the Income Tax Act.
 Section 56- Incomes taxable only in Income from Other Sources
are

• Dividend Income;
• Income earned from winning lotteries,
crossword puzzles, races (including horse
race), gambling or betting of any kind;
• Money or movable/immovable property
received without consideration or inadequate
consideration during previous year
• Interest on compensation or enhanced
compensation received;
• Advance money received or money received in
negotiation for transfer of a capital asset (only
if the money is forfeited and it doesn't result
in the transfer of such asset).
 Incomes taxable under IFOS, only if not taxable under
Profits and Gains of Business or Profession (PGBP):

• Any sum contributed towards provident funds,

ESI, etc. by employee to the employer, only if
not deposited in the relevant fund;
• Interest earned on Securities;
• Income received from the letting of a plant,
machinery or furniture, with or without
building
 Section 57- Expenditures allowed as deductions

• Expenses incurred for realisation of dividend

or interest income;
• Family Pension- deduction is allowed to the
extent of 33-1/3% of pension or Rs. 15000
whichever is less;
• Deductions for current repairs, insurance and
depreciation, will be allowed for income
earned by way of lease rental;
• A deduction equal to 50% will be allowed for
interest received on compensation or
enhanced compensation.
 Section 58- Sum not allowed as deductions while computing taxable income

• Personal expenditure;
• Interest or salary payable outside India
without TDS deduction;
• Wealth tax;
• Expenditure concerning winnings from
lotteries, crossword puzzles, races, and
gambling, etc.; and
• Expenses specified in Section 40A.
Deductions from 'Income from Other Sources' [Section 57]

• The income chargeable to tax under this head

'Income from Other Sources' is computed
after making the following deductions:
1. In the case of dividend income (and interest
on securities: any reasonable sum paid by way
of remuneration or commission for the
purpose of realising dividend or interest.
• 2. In the case of income in the nature of family
pension:
• Rs. 15,000 or
• 33 1/3  % (33.33%) of such income,
• whichever is lower.
In the case of income from machinery, plant or
furniture let on hire:
• repairs to building [section 30(a)(ii)];
• current repairs to machinery, plant or furniture and
insurance premium [section 31];
• depreciation on building, machinery, plant or
furniture [section 32]; and
• unabsorbed depreciation [section 32(2)].
 Deductions for expenses from dividend income [Section 57(i) and 57(iii)]

• The following expenses can be claimed as

deductions from gross dividend income other
than the dividends referred to in section 115-
O:
• Collection charges: any reasonable sum paid
by way of commission or remuneration to a
banker or any other person for the purpose of
realising the dividend.
Interest on loan: Interest on money borrowed for
purchasing the shares can be claimed as a
deduction. The interest can be claimed even if no
income is earned by way of dividend on such
shares. It has been held by the Supreme Court
that if the expenditure has been laid out for the
purpose of earning the dividend income then
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whether income is actually earned or not is

immaterial and deduction on account of interest
can be claimed. 
 Deductions permissible from letting out of
machinery, plant or furniture and buildings [Section
57(ii) and (iii)
• Insurance premium against risk of damage or
destruction of the premises.
• Repairs and insurance of machinery, plant or
furniture.
• Depreciation based upon block of assets, in the
same manner as allowed under section 32 in the
case of Income from Business and Profession
subject to the provisions of section 38 i.e. if it is
partly let and partly used for own purpose,
deduction of expenses (including depreciation)
shall be allowed to the extent it is let out.