5.1. WHAT IS BASIS OF CHARGE [ Sec. 56]
The Fifth and residuary head of income is “ Income from Other Sources”. Every income which does not specifically fall under any of the preceding Four heads of income ( viz., “Salaries” , “Income from House Property”, “Profit and Gains of Business or Profession” , or “Capital Gain”) shall be included in this head. Sub-Section (1) of Section 26 covers any income which does not fall under nay other head of income. However, Seb-section (2) of section 56 specifies 8 Incomes which are always taxable under the head “ Income from other Sources”.
General Provisions [ Sec. 56(1) :
The following incomes are generally chargeable under the head “ Income from Other Sources”:
- income from subletting ;
- interest on bank deposits and loans ;
- income from royalty
- director’s fee ;
- ground rent ;
- agricultural income from a place outside India ;
- director’s commission for standing as a guarantor to bankers ;
- director’s commission for underwriting shares of new company ;
- examination fees received by a teacher from a person other than his employer;
- rent of plot of land ;
- insurance commission
- mining rent and rotalty ;
- casual income
- annuity payable under a will, contract, trust deed ;
- salaries payable to a Member of Parliament ;
- interest on securities issued by a foreign Government ;
- family pension received by family members of a deceased employee ;
- in case of retirement , interest on employee’s contribution if provident fund is unrecognized.
- Income from undisclosed sources ;
- Gratuity paid to a director who is not an employee of the company ;
- Income from racing establishments ;
- Compensation received for use of business assets ;
- Annuity payable to the lender of a trade mark.
General Provisions [ Sec. 56(2 ] :
The following 8 incomes are always taxable under the head “ Income from Other Sources” –
1. Dividend : if such income is not chargeable to income-tax under the head "Profits and gains of business of profession.
2. Winning from Lotteries , etc. : it includes any winning from lotteries, crossword puzzle, races including horse races, card games and other games of any sort or from gambling or betting of any form or nature whatsoever.
3. Employees’ contribution to wards staff welfare scheme :
4. Interest on securities : Interest on Debentures, Government securities / bonds is taxable under the head “ Income from other sources”
5. Rental income of machinery, plant or furniture : Rental income from machinery, plant, or furniture let on hire is taxable as income from other sources.
6. Rental income of letting out of plant, machinery or furniture along with letting out of building and the two meetings are not separable.
7. Sum received under Keyman Insurance Policy :
8. Gift : if any sum of money is received during a previous year without consideration by an individual or a HUF from any person or persons exceeds Rs. 50,000 the whole of such amount is taxable in the hands of the recipient as income from other sources.