September 2025

Here’s a detailed analysis of the tax treatment of family pension payments received by legal heirs of a deceased employee under the Income Tax Act, 1961: 1. Taxability of Family Pension Classification: Taxed under “Income from Other Sources”[Section 56(2)]. Recipient: Legal heirs (spouse, children, dependent parents) of the deceased employee. Tax Basis: Pension amount is fully taxable but […]

1. Applicability of Section 56(2)(ic) This provision covers any sum of money received by an employer from an employee for: Welfare funds(e.g., employee welfare trust, group insurance, provident fund) Other similar contributionsdeducted from salary Key Condition: The amount must not be statutory (e.g., EPF, ESI) but voluntary or contractual. 2. Taxability in Employer’s Hands Taxable as “Income from Other Sources”if:

Section 57 of the Income Tax Act, 1961, permits specific deductions while computing taxable income under the head “Income from Other Sources.” Unlike business income, deductions are limited and strictly defined. 1. Deductions Allowed Under Section 57 NATURE OF INCOME DEDUCTION ALLOWED CONDITIONS Dividend Income (from non-exempt sources) Interest expense (up to 20% of dividend income) [Sec 57(iii)] Must be incurred to

1. Overview of Section 58 Section 58 specifies expenses that cannot be deducted while computing taxable income under the head “Income from Other Sources”, even if they are incurred to earn such income. This ensures strict compliance with tax laws and prevents misuse of deductions. 2. Key Non-Deductible Expenses CATEGORY DESCRIPTION RELEVANT CLAUSE Personal Expenses Expenses not wholly/exclusively

Section 59 deals with deemed income that becomes taxable under the head “Income from Other Sources” when certain conditions are met. It applies primarily to recoveries, benefits, or remissions related to previously claimed deductions or losses. 1. Applicability Section 59 applies when: An assessee has claimed deductions, allowances, or lossesin earlier years. Later, they recoverthe amount or obtain a benefit (e.g., remission of