Incomes Chargeable Under Section 56 For Income from Other Sources

Income of a taxpayer can be from one or the other sources whether being exempted or taxable. Thus, the tax department states for different heads for computing taxable income from other sources. As per Section 14 of the IT Act, the sum total of the following main heads represents the total taxable income of the taxpayer:

> Income from Salary

> Income from House Property

> Income from Business and Profession

> Income from Capital Gains

> Income from other Sources.

Income from other Sources has much wider scope in taxation as it includes all other sources of income, which cannot be placed or computed in the above other heads and also includes major deductions and exemptions for the taxpayer to avail.

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In this article, we have discussed tax-ability of different income sources under the head ‘’Income from other Sources ‘’.

Ø  With stated definition of dividend under Section 2(22), any dividend (deemed) declared by the company shall be chargeable to tax in the previous year in which it was declared, distributed or paid as the case may be. While, income distributed by a domestic company shall be exempted from tax under Section 10(34), as it is chargeable to dividend distribution tax under Section 115-O. (w.e.f from Finance Bill 2016, dividend shall be chargeable at 10% if the aggregate amount received by the shareholders exceed Rs 10 lakh. (Section 115BBDA).

Ø  Income received by the taxpayer by way of crosswords, lotteries, puzzles won, card games, horse races, and other games shall be chargeable to tax at a flat rate of 30% as per Section 115BB.

Ø  Income received by the company by issuing shares more than the fair market value (FMV). Such income shall be exempted for issue of shares by VCU (Venture Capital Undertakings and other class of companies as notified by Central Government timely.

Ø  Income received by way of interest on bank deposits, loans, company deposits or on other securities.

Ø  Income received by way of rent by letting out Machinery, Furniture, and Plant (including land which is inseparable from asset rented out).

Ø  Sums received under the Key man insurance policy including bonus if any received, not charged under the head Income from Business or Profession or Salary Income.

Ø  Sums received by an employer from his employee/employees as contributions to the provident fund or superannuation fund, under any scheme of ESI Act or under any other act secured for the welfare of employee but not deposited into the respective account before the due date of deposit.

Ø  Income received by way of compensation or interest on compensation receivable.

Ø  Sums received in excess of Rs 50,000 in cash without payment or delivery of any consideration in return.

Ø  Sum received by the transfer or as an advance in course of any transaction of a capital asset which was not finally transferred and such advance is forfeited by the transfer or due to the breach of contract on side of the transferal.

Ø  Sum received for transfer of any movable property (referred to only capital asset, not stock-in-trade or raw material, etc.) if it's market value exceeds Rs 50,000 and consideration paid for such transfer is nil or the value of the consideration paid exceeds the fair market value (being excess of FMV).

Ø  Sums received for transfer of any immovable property exceeding stamp value Rs 50,000 for which either no consideration is paid in return for the consideration amount exceeds the stamp value.

Ø  Any sum received by an Individual or HUF  from any relative ( being Spouse, brother, sister, brother or sister or spouse or siblings or parents of any other lineal ascendant or descendant other than received :

n  On Occasion of Marriage

n  In Inheritance or By Will

n  In Completion of any death

n  From any local authority including university, fund, foundation, etc referred in clause 23C (Section 10).

Ø  Any Sum received by any employee in compensation of his termination of employment or modification of terms or for either stated purpose.

Ø  Sums received by legal heirs as family pension.

Ø  Income received on subletting of house property by the tenant.

Ø  Income from agriculture land received held abroad.

Ø  Income received by way of interest received by the taxpayer from the tax department on delayed refunds.

Ø  Sums received as causal receipts or receipts of non-recurring nature.

Ø  Examining fees received by a teacher, not from the actual employer.

Ø  Incomes received by way of Bond Washing transactions and Dividend stripping (Section 94).

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