Income from Other Sources

Taxpayers should understand these sections and comply with the provisions of the Income Tax Act to avoid penalties and interest charges. Seeking professional advice is always recommended for effective tax planning and compliance with the applicable tax laws and regulations.

• Section 56(2)(vii): Income from Gifts; This section deals with the taxation of income received in the form of gifts. It specifies the types of gifts that are taxable and the exemptions available.
• Section 56(2)(x): Income from Cash Credits; This section deals with the taxation of unexplained cash credits in a taxpayer’s books of accounts. It specifies the tax rate and other provisions related to such income.
• Section 56(2)(ib): Income from Interest on Compensation or Enhanced Compensation; This section deals with the taxation of interest received by a taxpayer on compensation or enhanced compensation awarded by the government or any court or tribunal.
• Section 56(2)(xi): Income from Other Sources; This section deals with the taxation of any other income that is not covered under the previous sections of the Income Tax Act. It specifies the tax rate and other provisions related to such income.
• Section 57: Deductions from Income from Other Sources; This section specifies the deductions that can be claimed from the income earned under the head ‘Income from Other Sources.’ It includes expenses such as rent, interest paid on borrowed capital, and any other expenditure incurred to earn the income.
• Section 58(1)(a): Interest on Securities; This section deals with the taxation of interest received by a taxpayer on securities such as bonds, debentures, and government securities.
• Section 58(1)(b): Income from Rental of Plant and Machinery; This section deals with the taxation of income received by a taxpayer from the rental of plant and machinery.
• Section 58(1)(c): Income from Insurance; This section deals with the taxation of income received by a taxpayer from insurance policies such as endowment policies, money-back policies, and unit-linked insurance plans (ULIPs).
• Section 58(1)(d): Income from Royalties or Copyrights; This section deals with the taxation of income received by a taxpayer from royalties or copyrights on books, music, or other intellectual property.
• Section 58(1)(e): Income from Income from Other Sources; This section deals with the taxation of any other income that is not covered under the previous sections of Section 58. It includes income from hobbies, lotteries, or gambling, among others.
• Section 59: Income from Letting Out of Machinery, Plant or Furniture; This section deals with the taxation of income received by a taxpayer from the letting out of machinery, plant or furniture.
• Section 60: Income from Dividends; This section deals with the taxation of income received by a taxpayer in the form of dividends from domestic companies, mutual funds or unit trusts.
• Section 60A: Income from Agriculture; This section deals with the taxation of income received by a taxpayer from agricultural activities such as farming, horticulture, animal husbandry and pisciculture.
• Section 60B: Income from Winnings from Lottery, Crossword Puzzles, Races including Horse Races, Card Games and Other Games of Any Sort or Gambling or Betting of Any Form or Nature – This section deals with the taxation of income received by a taxpayer from winnings of any kind from gambling or betting activities.
• Section 60D: Income from Transfer of Carbon Credits; This section deals with the taxation of income received by a taxpayer from the transfer of carbon credits.
• Section 80TTA: Deduction from Income from Savings Account; This section allows a deduction of up to Rs. 10,000 from the gross total income of a taxpayer for interest earned from savings bank accounts.

Example:

The various sources of income from Other Sources are listed along with the date of receipt and the corresponding amount. The first entry represents the interest received from a savings account, the second entry represents the dividend received from a company, the third entry represents the winning amount from a lottery, and the fourth entry represents the rental income received from a property. The total income from Other Sources for the year would be the sum of all the amounts in the table, which is Rs. 1,55,000. This amount will be added to the taxpayer’s total income and taxed accordingly.