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Income from other sources
Under the Income Tax act, income of every kind which is not to be excluded from the total income shall be
chargeable to income tax under the head 'Income from other sources', if it is not chargeable to income tax
under any of the other heads of income. Thus, income from other sources is a residuary head of income i.e.
income not chargeable under any other head is chargeable to tax under this head. All income other than income
from salary, house property, business and profession or capital gains is covered under 'Income from other
sources'.
The following incomes are chargeable to tax :
Dividend received from any entity other than domestic company. This is because
dividend received from a domestic company has been made exempt in the hands of the receiver. Accordingly
dividend received from a cooperative bank or dividend received from a foreign company will be taxable as
income form other sources. Any pension received by the legal heirs of an employee. Any winnings from lotteries, crosswords, puzzles, races including horse races, card
games or other games of any sort or gambling or betting of any form or nature. Income from any plant, machinery or furniture let out on hire where it is not the
business of the assessee to do so. Income from securities by way of interest. Any sum received by the assessee from his employees as contribution to any staff
welfare scheme. However when the assessee makes the payment of such contribution within the time limit
under the scheme of welfare, then the payment will be allowed as a deduction and only the balance amount
will be taxable. Income from subletting. Interest on bank deposits.
Allowable Deductions
The following deductions are available to the assessee in obtaining the taxable amount :
In case of taxable dividend income and interest from securities, any reasonable sum
paid by way of remuneration or commission for the purpose of realizing such income including interest on
borrowed capital if such borrowed capital is used for making investment in shares or securities. In case of income from plant, machinery or furniture given out on hire, the
following expenses will be allowed as deduction :
Current repairs to building. Current repairs to machinery, plant or furniture. Insurance premium paid for insuring the plant, machinery, building or
furniture. Depreciation on building, machinery, plant or furniture.
In case of any expenditure other than capital expenditure or personal expenditure
which has been incurred wholly, necessarily and exclusively for earning income like revenue expenditure,
such expenditure will also be allowed as a deduction. In case of family pension received by legal heirs of an employee, a standard
deduction of 1/3rd of such amount or Rs 15,000 whichever is less will be allowed by way of deduction.
The following amounts are not deductible under Section 58 while computing the taxable
amount :
Personal expenses of the assessee. Any interest which is payable outside India on which income tax has not been paid or
deducted at source. Any sum paid on account of wealth tax in India or abroad. Any amount not allowable by virtue of it being unreasonable. Any expenditure in connection with income from winning form lotteries, crosswords,
cross puzzles, races including race horses, car race and other games of races, gambling, betting of any
form. However expense are allowed as a deduction in computing the income of an assessee who earns income
from maintaining as well as holding race horses.
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