Income from Other Sources for CFP

Basis of Charge Sec 56

• ™Income from other sources is the last and residual head of income
• Sub-section (1) covers any income which does not fall under any other head of income
• Sub-section (2) specifies 8 incomes which are always taxable under this head

1	Dividend	Dividend from Indian co. is not taxable in the hands of   shareholders Any dividend from foreign company is taxable here
2	Winning from lotteries	Lotteries, crossword, puzzle, horse race, gambling etc are taxable   here
3	Employee’s contribution towards staff   welfare scheme	Any sum received by assessee from his employees as contribution   towards staff welfare scheme or provident fund is taxable in the hands of   employer
4	Interest on securities	Interest on debentures, Government securities/ bonds is taxable   here
5	Rental income from machinery, plant, or   furniture	Its taxable here
6	Rental income from machinery, plant,   furniture along with building and two lettings are not separable	Its taxable here
7	Sum received under key man insurance policy	Its taxable here
8	Gift	If any sum of money received during previous year without   consideration by individual/HUF from any person or persons exceeding   Rs.50,000 the whole of such amount is taxable in the hands of recipient

Gifts

If any sum of money/property received during previous year without consideration by individual/HUF from any person or persons on or after 1/4/2006 exceeding Rs.50,000 the whole of such amount is taxable in the hands of recipient.

After 1^st Oct. 2009

Nature of   receipt	Sum   taxable
Any immovable property received   without consideration, the stamp duty valuation of which exceed Rs.50,000	Entire value of property equivalent to   the amount of stamp duty valuation
Any movable property received without   consideration and value of which exceeds Rs.50,000	The whole of the aggregate fair market   value will be chargeable to tax

Gifts Not Treated As Income

• Any sum/property received from relative
• Any sum/property received on the occasion of marriage of individual
• Any sum/property received under a will or by way of inheritance
• Any sum/property received in contemplation of death of the payer

Relative means

• Spouse of the individual
• Brother and sister of the individual
• Brother and sister of the spouse of the individual
• Brother and sister of the either of the parents of the individual
• Lineal ascendant or descendant of the individual
• Lineal ascendant or descendant of the spouse of the individual

Casual Income

• Income from gambling, betting, lotteries, horse races, quiz etc. are casual incomes
• Taxed at a flat rate of 30% (plus 10% surcharge and 3% education cess)
• Tax is deducted at source on payment
• Where assessee does not maintain any separate books account, money received will be taxable in the year of receipt and not in the year of declaration of prize.

 

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