INCOME FROM OTHER SOURCES

INCOME FROM OTHER SOURCES SPECIFIC S. 56(1) provides that following incomes, in particular, shall be taxed as Income from other sources: Dividends from foreign company. Winnings from lotteries, crossword puzzles, races including horse races, card games, other games, bettings, gambling etc. any sum received by the assessee from his employees as contribution to any staff welfare schemes. interest on securities. income from machinery, plant, or furniture belonging to the assessee let on hire. amount exceeding Rs. 50,000 received without consideration, from non-relatives, after Agricultural income from agricultural land situated outside India.

Income from sub-letting Rent from vacant plot of land. Directors board meeting fees. Directors commission for standing as a guarantor) Royalty

Expenses allowed as deduction as income from other sources Sec 57 EXPENSES FOR REALISATION OF DIVIDENDS & INTEREST Any reasonable sum paid by way of commission or remuneration to a banker or any other person for the purpose of realising any (taxable) dividend or interest on securities on behalf of the assessee can be Deducted EMPLOYEES’ CONTRIBUTION TO PROVIDENT ETC. FUNDS The employees’ contribution to provident fund, superannuation fund, Employees State Insurance Scheme etc. is to be included in the income of the employer, as seen above. The employer is, in turn, allowed deduction only in respect of such sums actually credited to the employees’ accounts, before the due date. Thus, the employer failing to deposit within due date such contributions collected from the employees is taxed on such amounts.

REPAIRS, INSURANCE & DEPRECIATION ON ASSETS LET OUT In the case of machinery, plant, furniture or (in case of joint lettings) building let on hire, the following amounts can be deducted: Payments for Current repairs to buildings. Payments for Current repairs to machinery, plant or furniture. Insurance premium paid in respect of machinery, plant or furniture. Depreciation (including unabsorbed depreciation) in respect of building, machinery, plant or furniture. STANDARD DEDUCTION ON FAMILY PENSION Family pension means a regular monthly amount paid by the employer to a family member of an employee in the event of the employee’s death. A deduction similar to the standard deduction allowed on income from salaries is allowed in respect of such family pension. The deduction is equal to 33 1/3 % of such income or Rs.15,000, whichever is less.

GENERAL EXPENDITURE Any other expenditure, not being in the nature of capital expenditure, laid out or expended wholly and exclusively for the purpose of making or earning such income, can be deducted. The expenditure is allowable, even if income is not actually received. Thus, if loan is taken for investment in securities on which no in received, yet, the interest on such loan can be deducted.

EXPENSES DISALLOWED[S. 58] The following expenses are expressly not deductible - any personal expenses of the assessee. any interest payable outside India on which tax has not been paid or deducted. any salaries payable outside India, unless tax has been paid or deducted thereon. wealth tax paid. any expenses or allowance in connection with income by way of winnings from lotteries, crossword puzzles, races, card games, other games, gambling, or betting. (However this prohibition does not apply to the owner of horses maintained for running in horse races).

amounts not deductible in accordance with the provisions of S.40A (see Chapter 7) so far as may be applicable to Income from other sources as they apply to computation of business, profits, e.g. Unreasonable or excessive payments to specified persons Expenses exceeding Rs. 20,000 paid in cash. Provision for gratuity on retirement. Employer’s contribution to non-statutory funds.