The Income Tax Return (ITR) filing deadline for the financial year 2019-20 (assessment 2020-21) ends on December 31, 2020. While filing ITR, individuals are required to mention if they have any ‘income from other sources’.
The Income-tax Act, 1961 divides an individual income into five heads—i.e. salary, business or profession, house property, capital gain and 'Income from other sources'.
According to Naveen Wadhwa, DGM, Taxmann, the 'income from other sources' is a residuary head of income.
"Any income which has to be included in the total income of the assessee, but it cannot be included under other four heads of income, is chargeable under the head other sources. Therefore, if any income which does not precisely falls under any specific head of income, it would be charged to tax under income from other sources," Wadhwa explains.
However, there are certain incomes that are always taxable under this head.
For example, dividends, winning from lotteries and Interest on securities, etc. Such income has to be reported in ‘Schedule OS’ in the ITR form.
"Taxpayers can claim expenditure while computing the income from other sources. Apart from the specific deductions allowable for various incomes, the expenditure incurred wholly and exclusively to earn the income (other than personal and capital expenditure) is also allowed to be deducted while computing the income taxable under this head. The income under this head is to be computed as per the cash or mercantile system of accounting regularly employed by the assessee," Wadhwa further explains.
Here's a list of incomes included under 'income from other sources' (Compiled by Kapil Rana, Founder & Chairman, HostBooks Ltd):
(i) Interest Income
(a) From saving bank account
(b) Post office saving bank account
(c) Fixed deposit
(d) Recurring deposit
(ii) Family Pension
(iii) Dividend Income
(iv) Winning from the lottery, crossword puzzles, races including horse races, card games and other games of any sort or from gambling, etc.
(v) Gift received subject to the provisions of section 56(2) etc.
(vi) Rental income from machinery, plants, buildings, etc.
(vii) Unexplained Income, investments, money, Expenditure & Undisclosed investments.
(viii) Any other income chargeable at a special rate.
(ix) Pass-through income in the nature of income from other sources.
(x) Income from the activity of owning and maintaining racehorses.
(xi) Accumulated balance of the recognised provident fund.
(Edited by : Ajay Vaishnav)