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Interest from bonds and debentures are also taxed under income from other sources.

The Income-Tax department has categorised income which is for the purpose of income tax reporting, into five heads of income. They are income from salary, income from house property, income from capital gains or loss, income from business and profession, and the last head is income from other sources that include income which does not fall under any of the four mentioned heads of income.

Let’s take a look at what income from other sources includes:

Dividend income

Dividends are classified as other sources of income. Dividends over Rs 5,000 are subject to Tax Deduction at Source (TDS). If the dividend amount exceeds Rs 5,0o0, the deductor must deduct TDS at a rate of 10%. If the payee fails to submit their PAN, TDS will be deducted at a rate of 20%.

That said, interest from bonds and debentures are also taxed under income from other sources.

Casual income

Lotteries, crossword puzzles, racing, gambling, betting, card games, entertainment shows, and game shows all fall under fully taxable income.

Assume that a person purchases a lottery ticket for Rs 1,000 and wins the jackpot of Rs 1,00,000. The taxable income will now be the full amount of the winnings, i.e., Rs. 1,00,000, rather than Rs 99,000. Casual income is taxed at 30% of the winnings plus surcharge and cess.

Income from Gifts

Any receipt over Rs 50,000 is subject to full taxation under the section income from other sources. However, the following gifts are not taxable under this heading:

-Gifts from relatives (spouse, brother or sister, brother/sister of either parent or spouse, any lineal ascendant/descendant of the individual or spouse

-Gifts are given on the occasion of marriage.

-Gifts made in a will or inherited

-Gifts from local governments/registered trusts

Income from bank deposit interest

Interest earned on your savings bank account must be disclosed as income from other sources on your tax return. Take notice that the bank does not collect TDS from interest earned on savings accounts.

Individuals must pay tax on the interest gained on bank fixed deposits, however, senior persons can deduct up to Rs 50,000 of interest received on savings and fixed deposits. Seniors claiming a deduction must include it on their income tax return (ITR). Interest income must be reported under the heading “Income from other sources,” and older citizens must claim a deduction under Section 80TTB.

Family pension

If you are collecting a pension on behalf of a deceased person, you must report this income under other sources of income. This pension is not taxable if it is commuted or paid in a lump sum. A family member’s uncommuted pension is exempt to a certain extent. Exemption from tax is limited to Rs. 15,000 or 1/3rd of the uncommuted pension received, whichever is smaller.

For instance, if a family member receives a pension of Rs 1,00,000, the applicable exemption is the lesser of Rs 15,000 or Rs 33,333 (1/3 of Rs 1,00,000). As a result, the taxable family pension will be Rs 85,000 (Rs 1,00,000 – Rs 15,000.) Uncommuted Pension is a term that refers to pensions that are received on a periodic basis.