Income from other sources.

Vaibhav N Banjan

Basis of Charge- U/s 56 General Provision- Section 56 (1) Income of every kind which is not to be excluded

from the total income under this Act shall be chargeable to income-tax under the head Income from other sources, if it is not chargeable to income-tax under any other of the heads such as

1) Salaries 2) House Property 3) Profit/ Gains from Business 4) Capital Gains

Basis of Charge- U/s 56Special Provision- Section 56 (2)i) Dividendsii) Winning of Lotteries, crossword puzzles, races or card

games or any sort of gambling & bettingiii) Sum Received by Assessee from his employees as

contribution to Staff welfare schemeiv) income by way of interest on securities (Debentures,

Bonds & Government Securities) v) Rental Income of Machinery or furniture let on hire

Basis of Charge- U/s 56vi) Rental Income of Letting out of Plant, Machinery or

furniture along with letting out of building and the tow lettings are not separable.

vii) Any sum received under a Keyman Insurance Policy including bonus if not taxable as Salary or Business Income

viii) Gifts (Receipts without/unadequate consideration/) i) Any sum of money total exceeding Rs 50,000 is

received by Individual/ HUF. Then Entire Amount ii) Any immovable property exceeding Rs 50,000 iii) Any Movable property exceeding Rs 50,000

Deduction u/s 57 i) In the case of dividends, [other than dividends referred to

in section 115-O,] [or interest on securities], any reasonable sum paid by way of commission or remuneration to a banker or any other person for the purpose of realising such dividend

ii) Deduction in respect of Employee’s contribution towards Staff welfare scheme towards any welfare fund of such employees is allowable only if such sum is credited to the tax payer account before the due date

iii) Repairs Depreciation in case of Letting of plant machinery & furniture

Deduction u/s 57 iv) In the case of income in the nature of family

pension, a deduction of a sum equal to 33 1/3 % of such income or Rs 15,000 whichever is less

v) any other expenditure (not being in the nature of

capital expenditure) laid out or expended wholly and exclusively for the purpose of making or earning such income.

Amount not Deductible u/s 58(a) in the case of any assessee,(i) any personal expenses of the assessee ; ii) any interest which is payable outside India on which tax has not been paid or deducted (iii) any Salaries, if it is payable outside India, unless tax has been paid thereon or deducted

iv) The provisions of section 40A shall, so far as may be, apply in computing the income chargeable under the head Income from other sources as they apply in computing the income chargeable under the head Profits and gains of business or profession.

Amount not Deductible u/s 58v) In the case of an assessee, being a foreign company, the provisions of section 44D shall, so far as may be, apply in computing the income chargeable under the head Income from other sources as they apply in computing the income chargeable under the head Profits and gains of business or profession.]

vi) no deduction in respect of any expenditure or allowance in connection with such income shall be allowed under any provision of this Act in computing the income by way of 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 or nature, whatsoever :

Gifts- Exceptions i) Gifts from Relatives ii) Gifts on the occasion of marriage of the individual iii) Gifts under a will or by way of inheritance, iv) Gifts in contemplation of death of the payer v) Amount received from any local authority vi) Amount received from any fund or foundation or university

or other educational institution or hospital or other medical institution or any trust or institution referred to in clause (23C) of section 10

vii) Any amount received from any trust or institution registered u/s 12AA.

Relatives i) spouse of the individual, ii)brother or sister of the individual, iii) brother or sister of the spouse of the individual, iv) brother or sister of either of the parents of the

individual, v)any lineal ascendant or descendants of the individual, vi)any lineal ascendants or descendants of the spouse of the

individual, vii) and spouse of the persons referred to ii) to vi) above

CLUBBING OF INCOME

SECTION 60 :Transfer of Income without transfer of Assets. CLUBBED IN THE HANDS OF

Transferor who transfers the income.

SECTION 61:Revocable transfer of Assets. CLUBBED IN THE HANDS OF

Transferor who transfers the Asset.

SECTION 64 1 (ii):Salary, Commission, Fees or remuneration paid to spouse from a concern in which an individual has a substantial* interest.

CLUBBED IN THE HANDS OF Spouse whose total income (excluding income

to be clubbed) is greater.

Clubbing not applicable if: Spouse possesses technical or professional

qualification and remuneration is solely attributable to application of that knowledge/qualification.

SECTION 64 1 (iv):Income from assets transferred directly or indirectly to the spouse without adequate consideration

CLUBBED IN THE HANDS OF Individual transferring the asset.

Clubbing not applicable if: The assets are transferred;

1. With an agreement to live apart. 2. Before marriage. 3. Income earned when relation does not exist.

SECTION 64 1 (vi):Income from the assets transferred to son’s wife. CLUBBED IN THE HANDS OF Individual transferring the asset.

Clubbing applicable if: The assets are transferred without adequate

consideration.

SECTION 64 1 : Transfer of assets by an individual to a person or AOP for the immediate or deferred benefit of his:(vii) - Spouse.(viii) - Son’s wife.

CLUBBED IN THE HANDS OF Individual transferring the asset.

Clubbing applicable if: The assets are transferred without adequate

consideration.

SECTION 64 1A : Income of a minor child

CLUBBED IN THE HANDS OF 1. If the marriage subsists, in the hands of the parent

whose total income is greater; or; 2. If the marriage does not subsist, in the hands of the

person who maintains the minor child. 3. Income once included in the total income of either of

parents, it shall continue to be included in the hands of some parent in the subsequent year unless AO is satisfied that it is necessary to do so (after giving that parent opportunity of being heard)

Clubbing not applicable for:— 1. Income of a minor child suffering any disability

specified u/s. 80U. 2. Income on account of manual work done by

the minor child. 3. Income on account of any activity involving

application of skills, talent or specialized knowledge and experience.

The parent in whose hands the minor’s income is clubbed is entitled to an exemption up to Rs. 1,500 per child.

Section : 64 (2) Income of HUF from property converted by the individual into HUF property CLUBBED IN THE HANDS OF Income is included in the hands of

individual & not in the hands of HUF. Clubbing applicable even if:

The converted property is subsequently partitioned; income derived by the spouse from such converted property will be taxable in the hands of individual.

THANK YOU