There are 5 sources stipulated under the Income Tax Act, 1961, like salary, business or profession, house property, capital gains and other sources. Income from other sources includes income from residual sources.
The last date for filing the income tax return has been extended to 31st August 2018. With this, taxpayers have got one month more to file their tax return. However, you should better hurry. It will help you avoid any last-minute glitches, apart from the fee for late filing. Under Section 234F of the Income-Tax Act, 1961, a fee of Rs 5,000 and Rs 10,000 will be levied now for late filing of return, depending on the case.
If you are filing your income tax return yourself, then a clear understanding of the income sources is required. You must know the sources of income and the form in which these incomes should be disclosed. Most taxpayers have income under salary, business and profession. There are certain incomes like gifts, lottery and betting, and pension income which are also required be disclosed in the income tax return under the head “Income from other sources.”
There are 5 sources stipulated under the Income Tax Act, 1961, like salary, business or profession, house property, capital gains and other sources. While the nature of income is quite evident for the four sources of income, income under other sources consists of income from residual sources. Here are some common types of income which need to be disclosed under the head “Income from other sources.”
Any gift received in excess of Rs 50,000 in cash, demand draft, cheque or specified assets by an individual or HUF is taxable. If the value exceeds Rs 50,000, the entire amount is taxable. Specified assets include gifts received in kinds, such as immovable assets like land and building and properties such as jewellery, paintings, shares, debentures, bullion and archaeological collections. The gift is taxable in the hands of the recipient. The gift received is not taxable if it is received from specified relatives, at the time of marriage, through will and inheritance, among others.
Lottery and betting
Winning from lotteries, crossword puzzles, races, card games, gambling or betting is classified as income from other sources. The entire income shall attract 30 per cent tax under section 115BB of the Act. The expenses incurred in getting the income is not allowed as an exemption in computing the income. The winner can not even claim the basic exemption of Rs 2.5 lakh up to which no income tax is charged.
Income from Dividend
The dividend income received from the company which pays dividend distribution tax is normally exempt. However, if the aggregate amount of dividend received exceeds Rs 10 lakh, then it is chargeable to tax at the rate of 10 per cent. If you have invested in the shares of a foreign company, the dividend will be taxable under other sources. If taxes have been paid by you in the country where the company is based, then you can claim relief under Double Taxation Avoidance Agreement (DTAA). The Income Tax Act gives a relief under section 91 in case the countries do not have DTAA.
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The interest earned on the savings account as well as the interest on fixed deposits need to be reported under other sources of income. For residential individuals or a HUF, the interest earned up to Rs 10,000 in a financial year from the savings account is exempt under section 80TTA of the Act. Make sure you register your income accruals while filing your return and claim tax exemption on your savings account.
Dependent family members receive a pension income after the death of an employee. The dependent members include spouse and children below the age of 25 years, unmarried daughter and dependent parents. The commuted pension is tax-exempt, but the uncommuted pension received by family members is taxable at 33.33 per cent or Rs 15,000, whichever is lower.