Presented By:

Abhey singh

Income From Other Sources: Section 56 to 59 of Income Tax Act, 1961 deal with this.  Acc to Section 56(1), income of every kind which is includible in total income under this Act, but which is not chargeable to income-tax under any of four head, shall be chargeable to income-tax under this head.  Thus any income which satisfies the following two conditions will be taxed under this head1. Income is chargeable to tax under this Act. 2. Such income is not chargeable to tax under any of four heads i.e. Income from salaries, Income from property, Profits and gains of business or profession, Income from capital gains.

CHARGEABILITY
1. DIVIDEND:under section 2(22), the following payments or distributions made by a company to its shareholders are deemed as dividend:1) 2) Any distribution of accumulated profits Any distribution of debentures, debentures stock or deposit certificate, whether with or without interest Any distribution of bonus shares made by a company to its preference shareholders. Any distribution made by a company to its shareholders on its liquidation any payment by way of loan or advance, to following:A shareholder who is the beneficial owner of at least 10% equity shares of company Any concern(HUF, firm, company), in which such shareholder is a member or partner or has substantial interest (beneficial owner of at least 20% profits of the concern)

3) 4) 5) a) b)

Dividend does not include following:1) Any distribution made by company out of its accumulated profits in the event of winding up or reduction of capital Any advance or loan given to a shareholder by a company in the ordinary course of its business where money-landing is a substantial part of the business of the company. Any dividend paid by company which is set-off by the company against the whole or any part of any sum previously paid by it and treated as dividend as per provision. Any payment made by company on purchase of its own shares. Any distribution of shares at the time of demerger by the resulting company to the shareholders of demerged company.

2)

3)

4) 5)

Following are various rules relating to assessment of dividend:1) a. b. c. Basis of chargeNormal or Final or annual dividend Interim dividend Deemed dividend

2)

ChargeabilityThe following provisions should be kept in mind while taxing the dividend in the hands of a shareholder:If dividend is declared, distributed or paid by a domestic company after march 31, 2003(or during June 1,1997 to March 31, 2002), then it is not taxable in hands of shareholder or who has a right to receive it. Such dividend is exempt from tax u/s 10(34). On such dividend company pay dividend tax u/s 115-O. in case of dividend received from a non-domestic or a foreign company from which tax has been deducted at source and such tax has not been deposited with the GOI, such dividend is chargeable to tax. No deduction is made in the case of dividend paid by a co-operative society.

a.

b.

c.

3)   

Place of accrualas per section 9(1) (iv), dividend paid by an Indian company outside India is deemed to accrue or arise in India. If dividend is paid by a foreign company outside India is not deemed to accrue or arise in India. Dividend from foreign company, if operating in India, is taxable in hands of non-resident only when it is paid in India.

4)

Dividend out of tax-free profitsDividend received by a shareholder is chargeable to tax whether it is paid by company out of its taxable or tax free profits.

5)

No deduction at source from dividendAs per section 194, no deduction shall be made in following cases:-

a) b)

The dividend is paid by an account payee cheque. Any dividend which is declared, distributed or paid by a domestic company on or after 1st April, 2003.

2. WINNING FROM LOTTORIES, CROSSWORD PUZZLES, RACES AND CARD GAMES etc.
 Income by way of winning from lottery or crossword puzzles or horse race or card game or any other game is subject to deduction of tax at 30% (plus surcharge, education cess and secondary and higher education cess).  For resident or non-resident rate of TDS is 30.9% (up to income 10.00.000) or 33.99% ( more than 10,00,000).  For domestic company rate of TDS is 33.99%.  For non-domestic company rate of TDS is 31.6725%.

3. INTEREST ON SECURITIES
 Security is a documentary evidence of loan, rate of interest, conditions for the repayment of loan and time of repayment is specifically and clearly noted and which is signed by debtor himself or any other person authorized on hid behalf.  Share is not a security.  Acc to sec 2 (28-B), interest on following securities is chargeable to tax:a. Int on securities of Central or State Gov. b. Int on debenture or other securities for money issued by or on behalf of- a local authority, a company or a corporation established by Central, State or provincial Act.

Kind of securities:Securities Govt. Securities Tax-free Less-tax Non-govt. securities Tax-free Less-tax

Basic Principles:a. b. c. d. e. Interest on securities is chargeable to tax on receipt or on due basis. Only the owner of security on the due date is chargeable to tax. Interest is deemed to be earned on certain dates on which it becomes due. Interest on securities is paid after deducting tax therefrom. When there are two or more joint owner of a security, the payment of interest and the deduction of tax at source shall be deemed to be in proportion of their ownership.

Securities not subjected to TDS:a. b. c. d. e. f. National development bonds. Any interest payable to LIC in respect of any securities. Any interest payable to General Insurance Corporation of India. 7-years national savings certificates. 6.5% Gold Bonds, 1977 or 7% Gold Bonds, 1980 held by resident and total nominal value of such bonds did not exceed Rs. 10,000 at any time to which interest relates. Notified debentures issued by any institute or authority, public sector company or any co-operative society or bank.

4. CONTRIBUTION RECEIVED FROM EMPLOYEES

Acc to section 2(24)(x), if an assesses receives any of following amounts from his employees, he is chargeable to tax:a. Contribution to an provident fund b. Contribution to superannuation fund c. Contribution to any fund set up under Employees State Insurance Act, 1948 d. Contribution to any other fund for welfare of employess.

5. INCOME FROM MACHINERY, PLANT OR FURNITURE LET ON HIRE 6. INCOME FROM COMPOSITE LETTIN OF BUILDIN S, MACHINERY, PLANT OR FURNITURE 7. RECEIPT WITHOUT COONSIDERATION
As per section 56 (2) (vi), if any sum of money exceeds Rs. 50,000 is received without any consideration by an individual or a HUF, in any previous year from any person or persons on or after April 1, 2006, then the whole of such sum shall be taxable. Exceptionsa. Any sum of money received from any relative b. Any sum of money received on occasion of marriage of individual c. Any sum of money received under a will or inheritance d. Any sum of money received in contemplation of death of payer e. Any sum of money received from any fund or foundation of university or other educational institutions or hospital or other medical institution. f. Any sum of money received from any trust or institution.

8. INTEREST ON KISAN VIKAS PATRA

9. INTEREST ON INDIRA VIKAS PATRA

10. INTEREST ON NATIONAL SAVINGS CERTIFICATES

11. INTEREST ON SOCIAL SECURITY CERTIFICATE

Besides these income, the following income are also chargeable to income-tax under Income from other sources:1) 2) 3) 4) 5) 6) 7) 8) 9) 10) 11) 12) 13) a. b. c. Agricultural income received from outside India Interest on securities of foreign Government or authority Salaries due to a member of Parliament Compensation received for use of business assets Any fee, commission, reward or other remuneration received by an employee from a person other than his employer, e.g., examination remuneration received by teacher, tips received by a waiter etc. Income from sub-letting of property Royalties or rent of mines received or receivable by owner of a coal mine Income from fisheries Amount received for loss of income from land Interest other than interest on securities such as int. on loan, on bank deposit and on provident fund etc Int. on employees contribution to unrecognized provident fund Gratuity received by director, who is not employee of company Income of cricket players who have been selected to play for India. Following rules are applicable:25% of income received from cricket Control Board of India for test matches played in India 50% of income received for matches played outside India Income from other matches played in India is tax-free if income is received from Cricket Control Board of India. Interest earned by a company on deposits during pre-production period Directors fee or salary to a director employee Rent received from leasing out the trademark Income from buster lands Income from units of Unit Trust of India. Int. on securities issued by a private body, institution or authority.

14) 15) 16) 17) 18) 19)