Different income sources that form part of 'Income from other sources'

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With the end of the fiscal year, you'll be required to account your income for the year by filing an income tax return (FY-2013-2014, AY-2014-2015). Other than the Income from salary, income from house property, capital gains income and income from your profession as the case may be you are also required to account for some other income sources that might have accrued in the year under the head 'Income from other Sources'. So, which are all such earning sources that form the part or are covered under the head.

A basic criteria that is followed while classifying a particular source of income as Income from other sources is that there must be an income, source of income should not be exempt under the IT Act 1961 and such an income should not be classifiable under any other head. And inclusion or accounting of each of the income sources while filing the return is highly crucial as in the other case, the department of income tax can impose of penalty.

1. Interest earned on securities: The precise definition for securities is not given by the dept. of Income tax. However, all secured investment instruments which is primarily an acknowledgement of a debt earning an interest for the bearer shall be accounted by the taxpayer in his return. All government issued bonds, debentures form the part of securities. A flat taxe rat of 30 per cent regardless of the taxpayer's slab is levied

2. Dividend income: Under Sec. 2(22), dividend income includes dividend earn on debentures as well as bonus shares issued to preference shareholders. Further as the dividend income earned from companies in India as well as mutual fund is exempt from tax liability, only the dividend income realized from foreign companies has to be included under the head income from other sources.

3. Gift amount over Rs. 50,000 from unrelated individual taxable in the hands of the receiver: As per the sub-section 2 of Section 56, a gift does not include only the amount in cash realized from an unrelated person but also a property gift or a property that is obtained for inadequate amount. Reporting of receipt of any NRE or foreign gifts should also be done under the head income from other sources.

4. Receipt of pension by heirs : Pension received by the legal heir on the death of the salaried employee is also to be accounted under the head income from other sources. And as per the provision, receiver of pension amount is allowed to claim a standard deduction of an amount of Rs. 15,000 or 33.33%, whichever is lower.

5. Other income sources from lottery winning, horse racing, cards game, gambling: Income earned from any such speculative activity is also chargeable under the head and a flat rate @ 30% is charged together with a cess of 3%.

6. Interest income on company/bank deposits, commission on insurance, interest income realized due to in delay in refund income, or rent for a vacant land are also chargeable under the head regardless of the amount.


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