Any income which is not chargeable to tax under Section 15, 22, 28, or 45, will be chargeable to tax as Income from Other Sources (IFOS) i.e. any income not taxable under the head Income from Salary, House Property, Business/Profession or Capital Gains, is chargeable to tax as Income from Other Sources.
Section 56 (2): Under Section 56 (2), the items that are mentioned as taxable under this head are as follows:- 1.
Interest on Securities, provided Securities are held as Investment and not as Stock-in-trade. (If they are held as Stock-in-Trade, then interest therefrom will be chargeable to tax as income from Business or Profession and not as income from Other Sources). 2.
Rent from Letting out of Plant & Machinery, Furniture.
Composite Rent (Combined Rent) from Letting out of Building, along with Plant & Machinery or other assets. For e.g.: Composite rent from letting out of a Cinema Building together with chairs, projectors and other furniture will be entirely chargeable as income from Other Sources. 4.
Dividend from shares of a Foreign Company or from shares of a Co-Operative Society. [Dividend from shares of an Indian Company is exempt from tax by virtue of section 10 (34), if it was not exempt, then it would have been chargeable to tax as income from Other Sources.] 5.
Any sum received as contribution by assessee from his employee towards any Staff Welfare Scheme. Initially when an employer receives any contribution from his employees towards any Staff Welfare Scheme, it becomes an income in his hand and later on when he deposits such sum in the respective fund, it is allowed as a deduction to him from his income as an allowable business expenditure, subject to the provisions of section 43B. 6.
Any sum received under a ‘Keyman Insurance Policy (KIP)’ including any Bonus therein. 7.
Winnings from Lotteries, Puzzles, Crosswords, Card games, any other game of any sort, Races including Horse Races or from Betting or Gambling. (Only Winnings from such activities and not business income generated out such activities. For e.g.: Income from Agency Commission on selling of Lottery Tickets will not be taxable as IFOS, but will be separately taxable as income from Business /Profession). 8.
Any Gift in cash (only cash and no other asset whether moveable or immoveable) exceeding Rs. 50,000/- received by an Individual or a Hindu Undivided Family on or after 01-09-2004, without any consideration from any person. However, following receipts of cash shall not be regarded as an income: (a.)
Cash received from any person on occasion of Marriage (only Marriage and no other function like Birthday Party or Engagement), (b.)
Cash received in contemplation death of the donor,
Cash received under a Will or Inheritance,
Cash received from a Relative.
For e.g.: Mr. A received Rs. 51,000/- from his friend Mr. X on 12/09/2006, then entire amount of Rs. 51,000/- (and not only the amount in excess Rs. 50,000/-) will be chargeable to tax in the hands of Mr. A, under the head Income from Other Sources.
Anything which is received in kind having ‘money’s worth’ i.e. Property was outside the purview of the existing provisions. Therefore Section 56 was amended w.e.f. 01/10/2009, to provide that the value of any property received by an Individual or HUF, without consideration or for inadequate consideration will also be included in the computation of total income of the recipient as follows:- [Such properties will include immovable property being Land or Building or both and Movable Property being Shares and Securities, Jewellery, Archaeological Collections, Drawings, Paintings, Sculptures or any Work of Art as well as w.e.f. 01/06/2010 Bullion also (only if these assets do not form part of Stock-in-Trade or Raw Material or Consumables of the business of the recipient. In simple words, on ly if these assets form part of Capital Asset in the hands of the recipient).]
[A.] In case of an...
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