Income from Other Sources

The Indian Income Tax Act, 1961 classifies taxable income under five distinct heads, with “Income from Other Sources” serving as the residual category under Sections 56 to 59. This head functions as a catch-all provision that taxes any income which doesn’t fall under the other four categories: Salaries, Income from House Property, Profits and Gains […]

Section 56(1) serves as the residual head of income, capturing all taxable income that does not fall under the other four heads: Salary Income from House Property Profits and Gains of Business or Profession (PGBP) Capital Gains Conditions for Chargeability: Existence of Income: There must be an actual receipt or accrual of income. Non-Exempt Status: The

Here’s a detailed explanation of the taxability of dividends under Section 56(2)(i) as “Income from Other Sources” under the Income Tax Act, 1961: 1. Scope of Section 56(2)(i) Section 56(2)(i) mandates that dividend income received by taxpayers (individuals, HUFs, firms, etc.) is taxable under the head “Income from Other Sources” unless exempt under other provisions. This includes: Dividends from

1. Applicability Section 56(2)(ib) covers casual and non-recurring income from: Lotteries(including online lotteries) Crossword puzzles Horse races Card games(e.g., poker, rummy if played for stakes) Gambling(casino, betting, etc.) Game shows(TV/online contests with cash prizes) 2. Tax Treatment Flat Tax Rate: 30% + 4% cess(effective 2%) under Section 115BB. No Deductions: Expenses incurred (e.g., ticket costs, participation fees) cannotbe deducted. No Slab

1. Scope of Section 56(2)(id) This provision covers interest income from securities when: Not chargeable under “Profits and Gains of Business or Profession” (PGBP) Not exempt under any other provision of the Income Tax Act Includes: Government bonds (e.g., RBI bonds, SDLs) Debentures (listed/unlisted) Corporate bonds Other marketable securities 2. Tax Treatment Taxable at Normal Slab Rates(5%-30% +

1. Applicability Section 56(2)(ii) covers rental income from: Machinery Plant(equipment, tools, vehicles) Furniture when not chargeableunder: Business income (PGBP), or House property income Key Condition: The letting must be separate from building/land. If let along with building, it may fall under composite rent (taxed differently). 2. Tax Treatment Taxable under “Income from Other Sources” Gross Rent Receivedis taxable Deductions Allowedunder Section 57:

1. Applicability Section 56(2)(x) covers: Cash gifts Immovable property(land, buildings) Movable property(jewelry, shares, artwork, vehicles, etc.) received: Without consideration (free) For inadequate consideration (below FMV) 2. Taxable Scenarios TYPE OF GIFT THRESHOLD TAXABLE VALUE Cash gifts ₹50,000/year Entire amount if >₹50k Immovable property ₹50,000 Stamp duty value – Consideration Movable property ₹50,000 FMV – Consideration

Here’s a comprehensive analysis of Section 56(2)(viib) of the Income Tax Act, 1961, which taxes share premium received in excess of fair market value (FMV) by closely held companies: 1. Purpose and Scope of Section 56(2)(viib) Introduced in 2012to prevent money laundering through inflated share premiums in closely held companies. Applies to: Closely held companies (not publicly

Here’s a detailed analysis of the taxability of interest on compensation or enhanced compensation under Section 56(2)(viii) of the Income Tax Act, 1961: 1. Scope of Section 56(2)(viii) Applies to: Interest received on compensation or enhanced compensationawarded under laws like the Land Acquisition Act, 1894. Taxable as: “Income from Other Sources”(not capital gains), effective post-2010 amendments. 2. Key Judicial

Here’s a detailed analysis of the taxability of forfeited advance money for transfer of capital assets under Section 56(2)(ix) of the Income Tax Act, 1961: 1. Scope and Applicability of Section 56(2)(ix) Introduced in 2014(via Finance (No. 2) Act), this provision taxes any advance or deposit received during negotiations for transferring a capital asset if: The amount