INDEX
Whats is Income from Other Sources
Types of Income From Other Sources
Additional Classifications
Taxation on Specific Income Types
How to Compute Net Earnings Under income from Other Sources
Reporting Interest from Fixed and Recurring Deposits on Tax Return
Tax Deductions Not Allowed
Income From Other Sources
1. Income from Other Sources — The “Everything Else” Bucket of Income Tax
Let’s be honest — “Income from Other Sources” is basically the junk drawer of the Indian Income Tax Act. Everything that doesn’t neatly fit under salary, house property, business/profession, or capital gains? Yep, it lands here.
Officially, Section 56(1) of the Income Tax Act, 1961, defines this as income that doesn’t fall under any other head. Unofficially, it’s the tax department’s way of saying:
“We see you. You thought we’d miss that extra income? Nope.”
2. Common Types of Income That Fall Here
Here’s what usually ends up under this “other” category:
🏦 1. Interest Income
Money earned from savings accounts, fixed deposits, bonds, or any other instrument that pays you interest.
Tax: As per your income tax slab.
Note: TDS won’t be cut on savings account interest, but it’s still taxable — sorry.
Deduction Alert: Under Section 80TTA, you can claim up to ₹10,000 off your savings account interest (₹50,000 for senior citizens under Section 80TTB).
🏠 2. Rental Income
If you’re earning rent from a property that isn’t taxed under “House Property” (say, machinery or furniture rent), it lands here.
Tax is on the actual rent received, minus allowable expenses like municipal taxes or maintenance.
💰 3. Dividends and Mutual Fund Income
Domestic company dividends: Usually tax-free (in your hands).
Foreign dividends: Taxable under this head.
Mutual funds: Income from them — like dividends or capital gains — might also pop up here.
👪 4. Family Pension
If you receive a pension after the death of a family member, it’s taxable as income from other sources.
Small silver lining: there’s a standard deduction — one-third of the pension or ₹15,000, whichever is less.
🎰 5. Lotteries, Game Shows & Gambling
Whether it’s Kaun Banega Crorepati or a Diwali poker night — winnings from lotteries, gambling, or betting are taxed.
Flat tax rate: 30% (plus cess).
TDS: Usually deducted before you even get your winnings.
🎁 6. Gifts & Cash Prizes
Not all gifts are tax-free.
Gifts above ₹50,000 in value (cash, property, or otherwise) are taxable.
But — gifts from relatives, or received on marriage or certain occasions, are exempt.
🎶 7. Royalties
Authors, musicians, inventors — if you earn royalties on your creative or intellectual work, that income is taxable here.
🧾 8. Club Membership Fees
Any income earned by way of club membership fees (like a social club or association) is taxable under this head.
🌾 9. Agricultural Income
Normally exempt — but if your agricultural income is over a certain level, it could bump up your tax rate on other income (via “partial integration”).
💼 10. Commission or Brokerage
Earnings from brokerage, real estate deals, or stock commissions — taxable here unless they’re already under your business income.
💵 11. Annuities
Payments you receive regularly from an insurance company or another entity are taxable too.
3. Bonus Round: Other Odd Incomes That Fall Here
If these aren’t already taxed under business or profession, they’ll show up under this head:
Employer contributions to an employee welfare fund.
Income from renting machinery, plant, or furniture (especially if it’s not part of a business).
Combined rental of building + machinery/furniture, when inseparable.
Money received under a Keyman Insurance Policy (including bonuses).
Basically — if the Act doesn’t tell you where to put it, this is where it goes.
4. Taxation of Common Income Types
💸 Interest from Savings Accounts
Taxed as per your slab.
No TDS on savings account interest, but it’s still taxable.
Section 80TTA: Deduction up to ₹10,000 for individuals (old regime only).
Section 80TTB: ₹50,000 for senior citizens on all interest (savings + FDs).
🏦 Interest from Fixed Deposits or RDs
TDS applies if annual interest crosses ₹40,000 (₹50,000 for seniors).
Even if no TDS is deducted, you still need to report it.
Senior citizens get a break: no TDS up to ₹50,000.
5. How to Calculate Net Earnings Under “Income from Other Sources”
To compute net earnings, follow this formula:
Net Income from Other Sources = Gross Income – Deductions Allowed Under Section 57
Steps:
- Identify Your Gross Income: This includes interest, rent, dividends, and other types of income.
- Calculate Allowable Deductions: Expenses incurred to earn the income can be deducted. For example, commission, rent, or depreciation on assets used for generating income.
- Subtract Deductions: This gives you the net income.
Example Calculation:
- Gross Income:
- Interest on savings accounts: ₹4,000
- Dividend income: ₹6,000
- Rental income: ₹10,000
- Total Deductions: ₹2,000 (machinery rental expense)
- Net Income: ₹20,000 – ₹2,000 = ₹18,000
6. Reporting Interest from Fixed and Recurring Deposits on Tax Return
Sum up the total interest from all fixed and recurring deposits. Include this amount under “Income from Other Sources” in your tax return. The interest will be taxed according to your applicable income tax slab.
What You Can’t Deduct
Not all expenses make the cut. These are not allowed:
Personal expenses (sorry, your Netflix subscription doesn’t count).
Interest paid outside India without paying tax on it.
Payments already taxable as salary.
Any wealth tax.
Final Word
“Income from Other Sources” may sound like a tax afterthought — but it’s sneaky. It includes a ton of things people often forget to declare: interest from FDs, small lottery wins, gifts, and more.
If you want to avoid getting that dreaded “notice from ITD,” report everything, claim legit deductions under Sections 57, 80TTA, or 80TTB — and keep your tax story clean.
Because while “other sources” sounds vague, the tax department knows exactly what they’re looking for.