The Income from Other Sources where you can calculate income tax, deductions and exemptions.
Heads of Income
The Income Tax Department breaks down income into five heads of income for the purpose of income tax reporting:
- Income from Salary
- Income from House Property is the assesse’s net income from houses, on which facilities are let out on lease.
- If any of the above investments had been sold during the year, then this would be included in income from capital gains/loss.
- Business Income and income derived from Profession
- Both Education Income and Education Income from Other Sources are comparable since the initial amount is equivalent to the subsequent ones added to arrive at the total amount.
Income from Other Sources means income other than income from employment, business or profession, it can be rental income, interest income, etc. It is income which does not fall under any of the other specified heads of income and may include interest earned on saving bank account, fixed deposits, dividend, rent received, gifts received etc.
Due to the numerous forms of income included under this head, it sometimes causes difficulties for the taxpayers. This guide provided you all the information about other sources of income so that you can easily do your income tax e-filing. In this head the different types of incomes are explained that come under this head how they are calculated how the report is prepared and how to report it while filing for ITR.
Income from Other Sources defined
As stated under section 56 (1) of the IT Act, 1961, other sources may be defined as all the income received by you from all other sources. In simple words, it is a provision that enables any income that cannot be declared under any other heads of income. it will be classified under this title. Other income is a category of income which covers all sources of income other than the regular business, stock exchange transactions, salaries received by the employee, House Property income, income from business or profession, and Capital gains.
Some common examples of income from other sources are:Some common examples of income from other sources are:
- Interest received on the saving account, fixed deposit account, RD Account and other financial instruments.
- The portion of the total gross income of a person that arises from lease of a property he or she owns
- Dividend income that is received from the shares and mutual funds.
- Lottery winnings, race/car/machine winnings, card games or other games of chance such as betting/gambling.
- Income that may be received from renting out any of the machinery or equipment,
- Any gift derived as a result of the exercise of professional expertise, Literary, artistic, or any other kind of work for considerations turning out to be more than Rupees Fifty Thousand in value in any given year.
Deduction on Interest Income under Section 80TTA
For saving accounts, section 80TTA of the Income Tax Act allows the customers to adjust the deduction on the interest income earned by them.
The availment of deduction under section 80TTA is with regard to the interest earned on savings account maintained with a bank, co-operative society or post office. There is also a limit up to which each of these expenses has to be claimed in a financial year, and this amount is Rs. 10,000 under this section.
Nevertheless, if the interest earned on the savings account exceeds Rs. 10,000/- in a financial year, then the interest will be taxed under the head ‘Income from Other Sources’. It must be noted here that this deduction is not allowable on interest earned on FDs, RDs or any other deposits.
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Income from Other Sources in ITR 1 Sahaj Form
When e filing ITR 1 online, you are required to indicate all other incomes in the total figure from other sources. As shown in the screenshot below, this disclosure has to be made under the tab “Computation of Income & Tax” in the field “B3: The next form that must be filled is. ”Income from Other Sources (Ensure to Fill Sch TDS2)”.
Income from other sources are some gains derived from other activities and sources of income that is computed and added to the taxpayers total gross income, to be then deducted the allowable expenses to arrive at the net earnings for the Income from Other Sources section of the return.
How to Compute the Net Earnings under the Income from Other Sources?
The net earnings under the head ‘Income from Other Sources’ in income tax are calculated as follows: