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2) Income from Other sources

Income which is not chargeable to tax under any other heads of income and which is not to be excluded from the total income shall be chargeable to tax as source of income under the head “Income from Other Sources”. Such as Interest, winning from lotteries, contract/sub-cont., commission, professional service etc.
Apart from above,there are few incomes classified under any other heads, these are certain types of incomes which are always taxed under income from other sources. Such incomesare as described below.

  • Dividends are always taxed under income from other sources. However dividends from domestic company are normally exempt from tax, in the case of resident individual/HUF/firm, dividend shall be chargeable to tax at the rate of 10% if aggregate amount of dividend received during the year exceeds Rs. 10, 00,000.

  • Winnings from lotteries, crossword puzzles, horse races, card game and other game of any sort, gambling or betting of any form is classified as income from other sources.

  • Gifts received by an individual / HUF which are chargeable to tax are also taxed under this head.

The following types of income can be classified as Income from Other Sources, if it is not taxed under the head “Profits and gains of business or profession”:

  • Employees’ contribution towards PF/ESI/ Superannuation Fund etc. not taxable under the head ‘Profits and Gains from Business or Profession for employers.

  • Interest on securities, are not taxable under head Profits and Gains of Business or Profession.

  • Income from letting out or hiring of plant, machinery, furniture.

  • Composite letting out of plant, machinery or furniture along with building; both the lettings are inseparable.

  • Amount received under a Keyman Insurance Policy including bonus.

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Tax Deduction claimed under Income from Other Sources:

The following deductions can be claimed while computing income from other sources:

  • Commission or remuneration for realising dividends or interest on securities.

  • Current repairing, insurance premium and depreciation in respect of plant, machinery, furniture and buildings are deductible from rent income earned by letting out of plant, machinery, furniture and building, which are chargeable to tax.

  • A deduction of lower of Rs. 15,000 or 33 1/3% of such income is available in case of income in the nature of family pension i.e. regular monthly amount payable by the employer to the family members of the deceased employee.

  • Deduction is available in respect of any other expenditure (not being capital expenditure) laid out or expended wholly and exclusively for the purpose of making or earning such income during the relevant previous year.

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