CHAP IV F – INCOME FROM OTHER SOURCES

A. Sec 56 – Chargeability
The following income shall be charged to tax under head “income from other
sources”
a) Dividends
b) Income by way of winning from lotteries, cross word puzzles, races
including horse race, gambling, betting etc.
c) Incomes like interest on securities; letting of machinery, plant or
furniture together with or without building; employees contribution to
welfare funds etc if not charged under head business or profession
d) Sum received under keyman insurance policy if not charged under
head ‘salaries’ or under ‘business or profession’
e) Interest on compensation or enhanced compensation
f) Any advance received against sale of capital asset and forfeited.
g) Sum of money or property received by any person as detailed below:

Note : In case a residential property which is held as stock in trade by the

seller and purchased between 12.11.2020 to 30.06.2021 the difference of
stamp duty value and the consideration only if exceeds 20% would be
taxable provided the value of such property is less than 2 Crores
 a) The sum is not taxable if received
a) from a relative
b) on occasion of the marriage of individual
c) under a will or by way of inheritance
d) in contemplation of death of payer
e) received from local authority
f) received from any fund, foundation, university, other
educational institution, hospital, medical institution,, any trust,
or institution referred in section 10(23C), charitable institute
registered u/s 12AA
g) from such class of persons and subject to conditions as may be
prescibed
b) Relative means:
a) Spouse of individual
b) Brother or sister of individual
c) Brother or sister of spouse of individual
d) Brother or sister of either of the parents of individual
e) Any lineal ascendant or descendant of the individual
f) Any lineal ascendant or descendant of the spouse of individual
g) Spouse of the person referred in b – f

B. Sec 57 – Deductions:
a) In respect of family pension a sum equal to 33.33% of the pension or
Rs.15,000 whichever is less.
b) In case of dividend deduction of interest on funds taken for investment
in securities subject to limit of 20% of such income.
c) In case of lease rental on letting of machinery, plant and furniture with
or without building, the following shall be deducted; a) Repairs b)
Insurance c) depreciation
d) Interest received on compensation or enhanced compensation – 50%
of such interest.
e) Any other expenditure not being capital expenditure, wholly and
exclusively for purpose of earning income.

C. Sec 58 – Inadmissible expenses

a) personal expenses
b) wealth tax
c) expenses of the nature specified in 40A
 d) any interest or salary chargeable under this act and paid outside India
without TDS
e) Cash payment in excess of Rs. 10,000
f) No deduction shall be allowed in respect of winnings from lotteries,
cross word puzzles, card games, races include horse race, gambling
betting etc

D. Exempted income under head income from other sources

a) Interest on notified securities, bonds, annuity certificates or other
savings certificates. – Tax free bonds of Indian Railway finance
corporation, NHAI, RECL, HUDCL, Indian infrastructure Co Ltd., Power
finance corporation etc.,
b) Interest on Non resident external account
c) Interest on Sukanya samruddhi account
d) Interest on post office savings account up to Rs. 3,500 in case of
single account and Rs. 7,000 in case of joint account
e) Family pension received by member of armed forces, where the death
has occurred in course of operational duties
f) Family pension received by member of armed forces, who has been
awarded notified gallantry award

E. Tax rates of income under the head other sources

Nature of income Tax rates

Casual incomes like lottery
winnings, races, betting, tv show
etc.,
Unexplained cash credits,
investments, money, bullion,
jewellery or expenditure
Flat 30%, without any deductions. Basic
exemption limit cannot be used. +
surcharge if applicable + health cess 4%
60% income tax
25% Surcharge on Income Tax
4% of health cess on IT and Surcharge
Effective rate 78%

Other incomes under income Regular normal applicable rates

from other sources

1) Dr. X is a retired professor of Economics. He submits before you the

following information for you to compute the income under the head income
from other sources for AY 2022-23

1. Interest on Post office Savings bank account – Rs. 28,000/-

2. Interest (net) on Fixed deposit account with a Bank – Rs. 3,84,000.
TDS made 10%.
3. He received Rs. 1,500 per lecture delivered at the Christian Institute.
During the previous year he delivered 84 Lectures.
4. He is an examiner of a number of universities. This source gave him a
remuneration of Rs. 20,000.
5. He lives in a rented house paying a rent of Rs 30,000 p.m. The house
is too big for his family. Hence he has He has sub let one third portion
of the house on a rent of Rs. 20,000 p.m. Dr. X has undertaken the
liability of paying municipal taxes of Rs.5,400 on the whole house and
also the current repairs of the whole house amounting to Rs.6,000.
 He claims 30% standard deduction from rent received. Clarify the
correct position of law.
6. He received family pension on account of Mrs X (who was government
employee and expired in 2014) Rs. 1,98,000 during the year
7. Winnings from card games Rs. 65,000
8. Interest on Savings Bank account with Canara Bank – Rs. 22,950
9. Dividend from listed Shares of various companies – Rs. 2,88,000
10.Interest on listed Debentures of Indian Company – Rs. 54,000 (Net of
TDS of 10%)
11.She celebrated her 70th birthday during the year and received 65,000
worth of gifts in kind and Rs. 22,000 in cash from her relatives and
friends. Her son also gifted a diamond ring costing Rs. 1,50,000/-
12.She participated in a TV game show and won price money of Rs.
2,00,000/- She however received Rs. 1,40,000 only after TDS
13.she purchased a immovable property for Rs. 16,00,000, and the
corresponding stamp duty value of which is Rs. 18,90,000/ she has
not objected the stamp duty value.
14.He won a lottery price and received Rs 34,550[net of TDS of 30%].