Section 35D – Amortisation of Certain Preliminary Expenses
May 4, 2018
form 16A
Income Tax Form 16A
May 4, 2018

Section 57 – Deduction on Income from other Sources

Last Update Date : August 11, 2018

section 57

Income tax is the government’s way of generating revenue for the whole year. There are some components that you are required to pay taxes on. However, deductions are also introduced by the government so that the taxpayers can get some relief on the tax liabilities that they are required to bear.

In this guide, we are going to discuss deduction under Section 57 of the Income Tax Act for ‘income from other sources’.

What is Income from Other Sources

Any income which is not chargeable under other heads of income is taxable as residuary income under the head ‘Income from Other Sources’

The nature of income earned will decide whether income is to be shown under this head.

Standard Inclusions in Income from other Sources

There are some standard inclusions are outlined below

Dividends

Income by way of dividend is shown under this head. Deemed dividend under section 2(22)(e) is fully taxable as is a dividend from co-operative societies and foreign companies.

Dividend not chargeable to tax includes dividends exempt u/s 10(34), i.e. dividend from Indian companies, dividend liable to corporate dividend tax, income on mutual fund units or income from UTI unitholder.

However, as per budget 2016, dividend received more than Rs 10,00,000 will be taxable at the rate of 10% in the case of resident individual / HUF / firm.

Winnings

This includes winnings over Rs 10,000 from lotteries, puzzles, races, games and all forms of gambling and betting. E.g. card games, horse races, game shows etc.

Interest Received

All interest income earned in the previous year (on compensation/enhanced compensation) is taxable. However, 50% of this income can be claimed as deduction u/s 57 of Income Tax Act, 1961.

Any sum received by an employer from his employees as a contribution towards PF/ESI/ Superannuation Fund etc.

If employees’ contribution is credited to their account in the relevant fund on or before the due date.

Note: If same is not deposited in the relevant fund and it is not taxable under the head ‘Profits and Gains from Business or Profession’.

Incomes not declared under the head ‘Profits and Gains of Business or Profession’

This includes

  • contributions made to an employer’s employee welfare fund,
  • interest earned on securities,
  • rental income from furniture, plant and machinery (including the building where it cannot be let out separately),
  • keyman insurance policy proceeds.

Gifts

This includes monetary or non-monetary items received without any consideration or without adequate consideration. Non-monetary gifts include all immovable property and certain movable property.

Gifts are taxed only if the total amount received during the previous year is more than Rs 50,000 and applies only to those gifts received after 01/10/2009. This doesn’t apply if the assessee receives money from

  • relatives or a local authority or a trust, fund, educational/medical institution, body or any such institution outlined under section 10(23C) and section 12AA
  • as a wedding gift
  • by way of being named in a Will or an inheritance
  • from a dying donor

Gifts from relatives mean gifts from the assessee’ s

  • parents, parents’ brothers or sisters (i.e. aunts, uncles)
  • any lineal predecessor/successor
  • brother, sister; brothers’ or sisters’ spouses (i.e. brothers or sisters- in-law)
  • spouse, spouse’s parents (i.e. in-laws),
  • spouse’s brothers or sisters (i.e. brothers or sisters- in-law),
  • spouse’s lineal predecessor/successor and their brothers or sisters.

Gifts include monetary gifts, immovable property and specified property.

Monetary gifts – Sums of money received without any consideration or without adequate consideration.

Immovable property as gifts – Property value will be the stamp duty value. It will be considered as inadequate consideration if the property value is lower than stamp duty value.

Specific movable property – Property here are shares, jewellery, securities, paintings, archaeological collections, sculptures and drawings and other artwork. As of 01/06/2016, bullion also forms a part of this list. Property value will be the fair market value. Inadequate consideration is when the property value is below fair market value.

[ Read: Gift Tax India ]

Consideration for Calculating Tax under ‘Income from Other Sources’

The income chargeable to tax under the head ‘Income from Other Sources’ is computed after considering the deductions available u/s 57 of Income Tax Act as given below:

Dividend or Interest Income on Securities

Any reasonable sum paid by way of commission or remuneration to a banker or any other person for realising such dividend or interest on behalf of the assessee

Note: It does not include the dividend on which the domestic company has paid dividend distribution tax.

Further, Dividend shall be taxable at 10% if the aggregate amount received is exceeding Rs 10,00,000 during a financial year.

Income from letting of machinery, plant or furniture with or without building

Rent, rates, taxes, repairs, insurance and depreciation etc. relating to such machinery, plant furniture or building.

Income from Family Pension

33.5% of actual pension received or Rs 15,000 whichever is less.

Any other Expenses for Earning Income

Any other expenditure (not being capital expenditure) laid out or expended wholly and exclusively for making or earning such income.

However, following conditions to be satisfied for claiming deduction u/s 57(iv)

  • The expenditure should be incurred for earning such income only.
  • It should not be capital expenditure.
  • It should not be a personal expenditure.
  • It should be incurred in the relevant financial year only.

How H&R Block can help you?

Every little deduction allowed on taxes is important and beneficial to a taxpayer. If you want to save maximum taxes, you are at the right place. H&R Block India is a world leader in e-filing income tax returns efficiently and in a hassle-free manner. You can either use our intuitive tax filing platform to easily file your tax return or let our tax experts e-file it for you. We have a team of in-house tax experts who can file your tax returns accurately while giving you maximum tax benefits.

e-File your tax returns with ease and convenience with H&R Block
  • Share: 

Still Have Questions?