Income from other source is a residuary head of income. Any item of income which does not fall under any other four specific heads of income is to be charged under this head. According to sec 56(2) following incomes are chargeable under this head. Dividend declared by a foreign company Family pension Winnings from lottery, crossword puzzles, horse race etc Income from plant, machinery or furniture let out on hire where it is not the actual business of the assessee. Interest from securities, bank deposits Income from sub letting Any other receipts which doesn’t fall under any other heads of income. Income from agricultural land situated outside India Examiner ship fees received by college teachers Income from undisclosed source Ground rent etc Receipts without consideration in certain cases Dividend It means any amount paid by a company, out of divisible profits, whether taxable or not taxable, to its share holders Continue reading
Income Tax Concepts
Income from Capital Gains
Any profits and gains arising from the transfer of a capital assets effected in the previous year shall be chargeable to income tax under the head capital gain in the PY in which the transfer took place. It should satisfy the following conditions There should be a capital asset The capital assets should be transferred. Transfer should result in profit or gains Capital Asset means any property of any kind held by an assessee whether or not connected with his business or profession. But the following assets are not capital assets. Any stock in trade, consumable stores or raw materials held for the purpose of his business or profession. All personal effects except jewellery Agricultural land in India which is situated in rural area etc. Continue reading
Profits and Gains of Business or Profession
Meaning of Business and Profession Business simply means any economic activity carried on for earning profits. According to Sec 2(3) business is “any trade, commerce, manufacture or any adventure in the nature of trade commerce and manufacture”. Any transaction with a motive of selling at profits included under this concept. It is not necessary that there should be a series of transaction in a business and it should be carried on permanently. Profession is an occupation requiring purely intellectual skills or manual skills controlled by the intellectual skill of the operator. e.g. Lawyer, doctor, engineer etc. So profession refers to those activities where the livelihood is earned by the persons through their intellectual or manual skill. Continue reading
Income from House Property
The annual value of any property comprising of building or land attached to the vicinity of the building of which the assessee is the owner, is chargeable to tax under the head income from house property. But if the assessee occupies the building or land attached to the vicinity of the building for the purpose of business or profession carried on by him, then it is not chargeable to tax. For income to be taxed as income from house property the following points should be noted 1. Building or land attached thereto. Building means a permanent constructed structure. Building includes residential house , bungalows, docks, warehouse, any block of bricks or stone work covered by a roof etc. The use of the building is immaterial. It may be let out for residential purpose, Continue reading
Income from Salary
DEFINITION According to [Sec 17 (1)] Salary includes (i) wages; (ii) any annuity or pension; (iii) any gratuity; (iv) any fees, commissions, perquisites or profits in lieu of or in addition to any salary or wages; Continue reading
Income exempt from Income Tax
Under Sec10 of income tax act the following incomes are exempt from tax 1. Agricultural Income [Sec 10(1)] Income from agricultural land situated within India is exempted from tax. 2. Share income of HUF [Sec 10(2)] Any sum received by an individual as a member of a Hindu Undivided Family either out of income of the family or out of income of estate belonging to family is exempt from tax. 3. Share of profit from partnership firm [Sec10 (2A)] Share of profit received by partners from a firm in which they are partners is not taxable in the hands of partners. 4. Gratuity [Sec 10(10)] Continue reading