Guide to .. Tax Management ,Tax Planning and Tax Saving

 

 

"Dividends And Income From Mutual Funds"- Income from 'Other Sources'

 

Income from dividends and income from mutual funds is fully exempted from income tax.


A dividend received by a shareholder is deemed to be his income for the previous year in which it is declared, distributed or paid. An interim dividend paid by a company shall be the income of the previous year in which the amount of such dividend is unconditionally made available by the company to the member who is entitled to it.

As per Section 14A of the Income Tax Act, 1961, any expendi ture incurred in relation to income not includible in total income is not allowed as a deduction.. Thus, with effect from AY 2004-05 any expenditure incurred on earning dividend and units income would not be deductible, for example, the interest you pay on loan taken for the purpose of buying the shares or units in question. Always avoid taking loan and then investing in the stock market in shares and units of equity-oriented mutual funds.
CONTENT - 'Income from Other Sources' and Its Computation (Section 56)

Related Topics....'Income from Other Sources'

Scope of Income Chargeable under the head 'Income from Other Sources' (Section 56)
Taxable Incomes under the head 'Income from Other Sources' [Section 56(2)]
Taxability of Dividend Income [Section 56(2)(i)]
Winnings from Lotteries, Crossword Puzzles, Horse Races and Card Games [Section 56(2)(ib)]
Interest on Securities under the head 'Income from Other Sources' [Section 56(2)(id)]
Income from Letting Out of Machinery , Plant or Furniture [Section 56(2)(ii)]
Income from Composite Letting of Machinery, Plant or Furniture and Buildings [Section 56(2)(iii)]
Share Premium in excess of the Fair Market Value to be treated as Income [Section 56(2)(viib)]
Interest on Compensation or Enhanced Compensation [Section 56(2)(viii)]
Forfeiture of Advance Received for Transfer of a Capital Asset to be Taxed under the head "Income from Other Sources" [Section 56(2)(ix)]
Income of any person to include not only gift of money from any person(s) but also the gift of property (whether movable or immovable) or property acquired for inadequate consideration [Section 56(2)(x), w.e.f. A.Y. 2018-19]
Amount Expressly Disallowed in computing the 'Income from Other Sources' (Section 58)
Deductions Allowed in computing the 'Income from Other Sources'(Section 57)
 

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