Calculate Net Income - Other Sources

Calculate Net Income from Other Sources such as Dividend, Gifts, Lotteries etc.,

Income from other sources is a residual head. If an Income is revenue in nature and does not fall with in

• Salaries,

• Income from House Property,

• Profits or Gains of Business or Profession,

it shall be chargeable under the head "Income from Other Sources", if it is not excluded from total income under Chapter III of the Indian Income tax Act.

Any Sum of Capital Nature received by the assessee which is not chargeable under any other head would also be chargeable under Income from Other Sources.

Topics Covered in this Page

• Income from Dividend

• Income from Winnings

• Income from Welfare Funds

• Income from Interest on Securities

• Income from Letting-out Plant & Machinery

• Income received as Gift

• Amount Received from Key man Insurance Policy

• Amount Received from Family Pension

• Salary Income of MPs, MLAs & MoCs.

• Income from Owning and Maintaining Race Horses

• Miscellaneous

Calculate Net Income - Dividend

Dividend Income shall be included in the total Income or Net Income of an assessee as under:

Dividend Income is computed as Under:

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Calculate Net Income - Income from Lotteries, Crossword Puzzels

Any winnings from

• Lotteries

• Crossword puzzles

• Races including horse races

• Card games and other games of any sort or from gambling or betting of any form

shall be included to the Total Income of an Assessee.

No deduction is allowable in respect of any expenditure - Section 58(4).

Where any income is given net of tax deducted at source, it should be grossed up for inclusion. Such Gross Income is taxable at a flat rate of 30%.

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Calculate Net Income - Income from Contribution to Welfare Funds

It represents Contributions to any

• Provident fund, Or

• Super-annuation fund, Or

• any fund set up under the provisions of Employees State Insurance Act, 1948

and it is received by the assessee from his employees.

Income from Contribution to Welfare Funds is computed as Under:

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Calculate Net Income - Income from Interest on Securities

Interest on securities means -

• Interest on any security of the

  • Central Government or

  • State Government;

• Interest on debentures or other securities for money issued by or on behalf of

  • A local authority, or

  • A Company, or

  • A statutory corporation.

Interest on Securities is chargeable under the head Other Sources, if it is not chargeable under the head Profits and Gains of Business or Profession.

Income from Interest on Securities is computed as Under:

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Calculate Net Income - Income from letting out of Plant, Machinery, Furniture & Fittings

Income from letting out of plant, machinery, furniture & fittings with or without buildings is chargeable under the head Other Sources, if it is not chargeable under the head Profits and Gains of Business or Profession.

Income from Letting is computed as Under:

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Calculate Net Income - Income from Sum Received without Consideration (Gift)

Any sum received without consideration by an Individual or a Hindu Undivided Family from any person on or after 01.09.2004, is chargeable to income-tax under the head Other Sources.

Computation is as Under:

Note: -

Gifts, if the aggregate value is more than Rs. 50,000 then it is chargeable to Income tax. Otherwise Not.

A Relative means

1. Spouse of the Individual

2. Brother or Sister of the Individual

3. Brother or Sister of Spouse of the Individual

4. Brother or Sister of either of the Parents of the Individual

5. Any Lineal ascendant or descendant of the Individual

6. Any Lineal ascendant or descendant of Spouse of the Individual

7. Spouse of the persons referred to in (b) to (f)

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Calculate Net Income - Income from Key Man Insurance Policy

Any amount including bonus received under Keyman Insurance policy is chargeable under this head if it received by family member of the employee.

It is chargeable under the head Salaries, if received by employee.

It is chargeable under the head Profits and Gains of Business or Profession, if received by employer.

The computation is as under: -

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Calculate Net Income - Income from Family Pension

Family pension received by the employee's family is taxable under the head Other Sources.

Computation is as Under:

Exemptions available under sections 10(18)(ii) and 10(19): -

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Calculate Net Income - Salary Allowance of MP, MLA or Any Committee (MoC)

The Salary and Allowance of MP or MLA or MoC are chargeable under the head Income from Other Sources and not under the head Salaries, since there is no employer-employee relationship between the payer and payee.

The computation is as under: -

The amount exempt under section 10(17) is as under: -

1. Daily allowance received by MP or MLA or MoC.

2. Any other allowance received by MP.

3. Any constituency allowance received by any person by reason of his membership of any State Legislature under any Act or rules made by that State Legislature.

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Calculate Net Income - Owning and Maintaining Race Horses

Any income from the activity of owning and maintaining race horses for running in horse races, shall be determined only under the head Other Sources.

However, where such activity carried on is regular and systematic and the dominant intention is earning income from allowing it to run in races or to sell/lease the horses, the income may be charged under the head Business or Profession.

Horse Race means a horse race upon which wagering or betting may be lawfully made.

The computation is as under: -

Note: -

Income by way of stake money means: -

The gross amount of prize money received on a race horse or race horses by the owner.[Section 74A]

Any other Expenditure means: -

• Any amount Laid out or expended wholly and exclusively for the purposes of maintaining race horses.

• But Not being Capital Expenditure.

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Calculate Net Income - Other Sources Miscellaneous

Expenditure: -

Any other expenditure referred to in the above computations (Except for Race Horse Maintenance) is an expenditure: -

1. Incurred wholly and exclusively for the purpose of making or earning any income under the head "Other Sources".

2. Not being of a capital nature.

3. Not being of a personal nature.

However in case of Income from the activity of owning and maintaining race horses for running in horse races the term Any other Expenditure means: -

• Any amount Laid out or expended wholly and exclusively for the purposes of maintaining race horses.

• But Not being Capital Expenditure.

Expenses Not Admissible: -

Further the following expenses are not admissible: -

1. Interest and Salaries payable outside India on which no tax is deducted at source.

2. Wealth-tax.

3. Expenses referred to in section 40A.

Practice Note: -

The provisions of section 41(1) & 44D shall apply to this head of income as it applies to "Profits and Gains of Business or Profession".

Similarly section 145 shall have applicability to this head in so far as the provisions of system of accounting and notified accounting standards are concerned.

However, there is no specific provision under the head 'Other Sources', either enabling section 44AA or a section of its own, for maintenance of books of accounts.

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