INCOME TAX LAW AND PRACTICE
HOSTED BY
Dr. C. SAFFINA
Dr.C.Saffina
Assistant Professor of Commerce (CA) Bon Secours College For Women
Thanjavur
INCOME FROM OTHER SOURCES
It includes incomes which are not taxable in other heads of income.
Income from other sources is one of the heads of income chargeable to tax under the Income Tax
Act.1961
The following income shall be chargeable under the head income from other sources under section 56(2).
Dividend from cooperative societies and foreign companies.
Interest on securities.
Winnings from lotteries, crossword puzzles, other
games of any sort of gambling or betting .
Income from machinery, plant or furniture let on hire.
Any sum received by the Assessee from his
employees as contribution to any welfare scheme.
Any sum received under “Keyman insurance policy”
including bonus .
Any sum of money received by an individual or HUF
exceeding Rs.50000 is taxable.
DIVIDEND
It refers to the sum receive by a shareholder of a company distributed out of the profits, where distributed out of taxable income or Taxfree
income.
PROBLEM 1
• Mr. A furnishes the following particulars of his income for the previous year 2018-19. Compute his income from other
sources for the assessment year 2019-20.
a) Dividend(gross) from Ashok Leyland Ltd - 25000 b) Dividend from an cooperative society - 5000 c) Divided from a foreign company - 26000
d) Divided from UTI - 3000
COMPUTATION OF INCOME FROM OTHER SOURCES OF MR.A FOR
THE AY2019-20
Particulars Rs
Dividend Income:
Dividend from a cooperative
society 5,000
Dividend from a foreign company 26,000
Income from other sources 31,000
Notes
• Dividend from Indian companies and UTI are not taxable.
• Dividend from Foreign company and
cooperative society are taxable.
CASUAL INCOME
2 . Mr. B received the following incomes during the year 2018-19.Calculate income from other sources.
a) Winnings received from Sikkim lottery – 70000
Winnings from horse races – 2000
Winnings from crossword puzzles - 4000
COMPUTATION OF INCOME FROM OTHER SOURCES OF MR.B FOR
THE AY2019-20
Particulars Rs
Winnings received from Sikkim lottery(Rs.70,000) 1,00,000 gross: 70,000 x 100
100-30
Winnings from horse races (< Rs.5,000 , No TDS) 2000 Winnings from crossword puzzles(< Rs.10000, No TDS) 4000
Income from other sources 1,06,000
EXPLANATION
• When amount received is given it represents net amount . Grossing up is required.
• Race winnings are subject to TDS @ 30% if the income exceeds Rs. 5000.
• Lottery winnings and winnings from
crossword puzzles are subject to TDS @ 30%
if the income exceeds Rs. 10,000.
• Gross amount = Net amount x 100/100-tax rate
Illustration 3.
Kanagasabapathy of Salem constructed a factory with building, plant, machinery, furniture.. Etc.
However he decided to lease out the factory on a hire charge of Rs. 25,000 per month.
During the previous year 2018-19, he spent Rs. 15,000 for repairs and Rs. 10,000 for insurance on the assets. Allowable depreciation is Rs. 35,000 P.A. Ascertain his ‘Income from other
sources’ from the above details.
Solution:
Computation of income from other sources of Kanagasabapathy for the previous year 2018-19
Particulars Rs. Rs.
Income from letting out on hire of plants, machinery,
Furniture along with building. 25,000 x 12 3,00,000
Less: Deductions:
Repairs 15,000
Insurance 10,000
Depreciation 35,000
60,000
Income from other sources 2,40,000
