Taxation Exam > Taxation Notes > Fast Track Quick Revision Income Tax > Income from Other Sources (Section 56 to 59)
Income from Other Sources (Section 56 to 59)
| Sections | Particulars | Provisions | ||||
| 56. | Charge | 56(1) | Any income which is not charged under the first 4 head is charged under the head ‘Income from Other Sources‘. E.g. | |||
| Director’s, MP’s, MLA’s, salary | Rent from vacant land. | Income from sub letting. | Interest | |||
| Royalty | ||||||
| 56(2) | Following incomes are always charged under the ‘OS‘ | |||||
| Gifts | Dividend | Lottery income | Rent of Plant | |||
| 57. | Amount expressly allowed as deduction. | Expenditure should be incurred wholly and exclusively for earning S 56 income. E.g. (a) Interest on loan taken for purchase of bond. (b) Collection charges. (c) Contribution towards PF | ||||
| 58. | Restriction on deduction. | Following deductions are not allowed. E.g. Expenses incurred in earning lottery income. | ||||
| 59. | Deemed income | As per S 41. (Refer PGBP) | ||||
| S 56(2). GIFTS | |||||
| Part A | Part B | Part C | |||
| Nature of gift | Cash Gift | Land & Building on or after 1-10-2009 | JAD PB SAS on or after 1-10-2009 | ||
| Donor / Seller | Any Person | Any person | Any person | ||
| Donee / Buyer | Ind / HUF | Ind / HUF | Ind / HUF | ||
| Consideration | Nil | Nil or inadequate consideration | Nil or inadequate consideration | ||
| In excess of certain amount taxable in the year of receipt | Cash in excess of Rs. 50,000 in aggregate is taxed u/h OS | a. | Stamp duty value exceeds Rs.50,000 taxed | a. | FMV in excess of aggregate ₹ 50,000 taxed |
| b. | Difference = (SDV – PP) in excess of Rs. 50,000 taxed | b. | Difference = (FMV – PP) in excess of aggregate Rs. 50,000 taxed | ||
| Exceptions to Part A, B & C | |||
| 1. | Gifts received from any relative | 4. | Gifts received on the marriage of the individual |
| 2. | Gifts received under a will or inheritance. | 5. | Gifts received in contemplation of death of the payer |
| 3. | Money received from local authority. | 7. | Money received from a registered charitable institute |
| 7. | Money received from any fund, foundation, university, other educational institution, medical institution. | ||
| S 56(2). Relative | |||
| Other Incomes charged under the head other sources | |||||||||||
| 1. | Life insurance maturity proceeds if premium for any year exceeds 10% of assured amount. | 4. | Family pension less (1/3rd or ₹ 15,000 whichever is lower). | ||||||||
| 2. | Owning & maintaining race horses. | 5. | Letting of plant & machinery. | ||||||||
| 3. | Composite letting of building + P & M. | 6. | Lottery income. No deduction. | ||||||||
| 7. | Maturity proceeds of keyman insurance policy. |
| |||||||||
| Interest on Securities | |||
| Securities held as | Stock in Trade | Interest charged under the head Business. S 28 to 44D. | S 37. Interest on loan & collection charges to run business is allowed as deduction. |
| Investment | Interest charged under the head Other Sources. S 56 to 59. | S 57. Interest on loan & collection charges allowed as deduction. | |
| S 10(15). Following interest exempt from tax. | |||||
| Post office scheme | Full exemption | (a) Cash Certificates (b) Fixed deposit (c) Cumulative time deposit account (CTD). | Note : Interest on Monthly scheme is not exempt interest is fully taxable. | ||
| Partial exemption | (d) Saving account | Single | upto Rs. 3,500 exempt | ||
| Joint | upto Rs. 7,000 exempt | ||||
| Interest on Govt. Securities | a. | Interest on RBI Relief bonds | Interest on other Govt. Securities are fully taxable under the head Other Sources | ||
| b. | Interest on Gold Bonds. | ||||
| S 10(4) | Interest on Non Resident External Account is fully exempt from tax | ||||
| Dividend | ||||
| Securities held as | Stock in Trade | Dividend always charged under the head Other Sources. S 56 to 59. | from Indian Company | from foreign Company |
| Investment | Exempt u/s 10(34) | Texable | ||
| S 57. Interest on loan & collection charges allowed as deduction if dividend is taxable. | ||||
| Interim Dividend : Taxable in the year of receipt. | Final Dividend : Taxable in the year of declaration. | |||
| S 10(35). Income from units of mutual fund is exempt from tax. | ||||
The document Income from Other Sources (Section 56 to 59) is a part of the Taxation Course Fast Track Quick Revision Income Tax.
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FAQs on Income from Other Sources (Section 56 to 59)
| 1. What are the different types of income that fall under the category of "Income from Other Sources"? |  |
Ans. Income from Other Sources includes income that is not classified under any other specific category of income, such as salary, business profits, or capital gains. Examples include interest on savings accounts, rental income, income from royalty, income from letting out machinery, and gifts received exceeding Rs. 50,000.
| 2. Is income from winnings in lotteries, crossword puzzles, or game shows also considered as "Income from Other Sources"? | |
Ans. Yes, income from winnings in lotteries, crossword puzzles, or game shows is considered as "Income from Other Sources." Such income is taxable under Section 56 of the Income Tax Act. The income is taxable at a flat rate of 30% without any deductions.
| 3. Are gifts received from relatives taxable under "Income from Other Sources"? | |
Ans. No, gifts received from relatives are not taxable under "Income from Other Sources." According to the Income Tax Act, gifts received from specified relatives, including parents, siblings, and grandparents, are exempt from tax. However, if the gift received exceeds Rs. 50,000 in value, it would be taxable.
| 4. How is rental income taxed under "Income from Other Sources"? | |
Ans. Rental income is taxed under "Income from Other Sources" as per the provisions of the Income Tax Act. The rental income received is added to your total income and taxed at the applicable slab rates. However, you can claim deductions for certain expenses related to the property, such as municipal taxes, repairs, and maintenance.
| 5. Can income from interest on fixed deposits be considered as "Income from Other Sources"? | |
Ans. Yes, income from interest on fixed deposits is considered as "Income from Other Sources." Any interest earned on fixed deposits, whether with banks or other financial institutions, is taxable as per the income tax slab rates applicable to the individual. It is important to mention this income while filing your income tax return to ensure compliance with tax laws.
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