Q. What constitutes Income from
other sources?
A. A source of income, which
does not specifically fall under any of the other heads of
income namely Salary, Income from house property , Profits and
gains from business or profession or capital gains will be
brought to charge under section 56 under the head `Income from
other sources'. In other words, it can be said that the
residuary head of income can be resorted to only if none of
the specific heads is applicable to the income in question,
and that comes into operation only if the other heads are
excluded.
Q. What are the various incomes
taxable under the head Income from Other
Sources?
A. The following incomes are
chargeable under this head, namely, Income from interest on
bank deposits and loans, royalty, directors fees, ground rent,
agricultural income from outside India, examination fees
received by a teacher, rent of a plot of land, insurance
commission, mining rent and royalties, casual income in excess
of Rs. 5000 (Rs. 2500 in case of winnings from races including
horse races), winnings from lotteries, crossword puzzles, card
games etc. Income from machinery, plant or furniture let on
hire and interest on Securities.
Q. What is
deemed dividend and is it taxable?
A. Any payment by way of a
loan or advance by a closely-held company to a registered
shareholder holding substantial interest - provided the loan
should not have been made in the ordinary course of business,
and money-lending should not form a substantial part of the
company’s business - is treated as deemed dividend and is
taxable under the head,Income from other sources. However,
subsequent dividend to the extent it is so set-off against any
loan or advance deemed as dividend is not taxable.
Q. Are there any securities, the
interest on which is exempt from tax?
A. From the assessment year
1989-90, interest on the following is exempt from tax:
- Interest on notified securities, bonds and certificates.
The notified securities/bonds etc., are: 12 year National
Savings Annuity Certificates; National Defence Gold Bonds,
1980; Special Bearer Bonds, 1991; Treasury Savings Deposit
Certificate; Post Office Cash Certificates (5 years);
National Plan Certificate (10 years); National Plan
Certificates (12 years); Post Office National Savings
Certificates (12 years/7 years); Public Account of Post
Office Savings Account Rules (interest upto Rs. 5000); Post
Office Savings Rules; Post Office CTD; Fixed Deposit
[Government Savings Certificates (Fixed Deposits) Rules,
1968 or Post Office (Fixed Deposit) Rules, 1968]; Special
Deposit Scheme, 1981 and Non-Resident (Non-Repatriable)
Rupee Deposit Scheme.
- Interest to an individual and Hindu undivided family on
7 % Capital Investment Bonds with effect from the assessment
year 1983-84.
- Interest on notified bonds arising to non-resident
Indians [i.e., NRI Bonds and NRI Bonds (Second Series),
issued by the State Bank of India].
- Interest on securities held by the Issue Department of
the Central Bank of Ceylon.
- Interest payable to any foreign bank performing central
banking functions outside India in respect of deposits made
by such bank with any scheduled bank in India (from
assessment year 1985-86).
- Interest on 9% Relief Bonds, 1987 in case of an
individual or a Hindu undivided family.
- Interest on notified debentures of public sector
companies.
- Interest on deposits made in a notified scheme by a
retired Government employee and an employee of a public
sector company with effect from April, 1991 out of the money
due to him on account of retirement, applicable from the
assessment year 1990-91.
Q. What do
you mean by Family pension and how is it taxable
?
A. “Family Pension” means a regular monthly
amount payable by the employer to a person belonging to the
family of an employee in the event of his death.
Taxability
: "Family Pension" will be taxable under the head, Income from
Other Sources.
The
asseessee will be allowed a deduction of a sum equal to
one-third ( 1/3 rd) of such income or rupees fifteen thousand
, whichever is less.
