Income from other sources3A 18 and 31
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Transcript of Income from other sources3A 18 and 31
INCOME TAXINCOME TAX
You earn itYou earn it
&&
The GovernmentThe Government
takes a part (a big part) of ittakes a part (a big part) of it
Sources of Income
Agricultural Income
Income from Salaries
Income from House Property
Profits & Gains from Business OR Profession
Capital Gains
Income from Other Sources
You are going to be taxed anyways ………….
So grin and bear it!!
We could pay taxes with a smile,
but normally CA$H is required!!
The definition of the term “Income” in Sec. 2(24) is inclusive and not exhaustive
It may be broadly defined as the true increase in the amount of wealth which comes to a person during a fixed
period of timePeriodical monetary return with regularity
May be recurring
GROSS TOTAL INCOME
As per Section 14, income of a person is computed under the
following heads:
Salaries
Income from House Property
Profits & Gains from Business or Profession
Capital Gains
Income from Other Sources
A source of income which does not specifically fall under any one of the other four heads of income is to be computed and brought to charge under the head:
“Income from Other Sources”.Sec. 56(1)
Section 56(2) enacts that in particular and without prejudice to the generality of the provisions of sub section (1), the following incomes shall be chargeable under the head Income from Other Sources.
i. Dividends
ii. Winnings from lotteries, crossword puzzles, horse races, card games, gambling or betting
iii. Interest on securities
iv. Income from machinery, plant or furniture let on hire
v. Sum received from Keyman Insurance Policy
vi. Income from sub-letting of a house property
vii. Casual income & non-recurring income
viii.Insurance commission
ix. Family pension
x. Directors Sitting Fee
ConditionsConditions
There is an income
Income shall not be exempt
Not covered by other heads
Examples:
Casual Income
Subletting
Undisclosed sources
Salaries payable to a Member of Parliament
Family pension received by family members of a deceased employee
Income to also include any sum of money (i.e., gift) exceeding the specified amount received by an individual / HUF, if it exceeds Rs. 50,000, but will not apply to a sum of money received from:
from any relative; or on the occasion of the marriage of the individual; or under a will or by way of inheritance; or in contemplation of death of the payer; or from any fund or foundation or university or other
educational institution or hospital or medical institution; or from any trust or institution registered u/s 12AA
In other words…………….
you just can’t escape being
T - axed
BUT…… all is not lost!
You do get some deductions (Section 57)
In respect of income from machinery, plant or furniture let on hire:
amount paid on account of current repairs to premises [Sec 30(a)(ii); amount paid on account of current repairs to machinery, plant or
furniture premium paid for insurance against risk of damage to premises depreciation on building, machinery, plant or furniture [Sec 32(1)
and 32(1A)] benefit of unabsorbed depreciation
In respect of income in the nature of family pension:
a deduction of a sum equal to 33⅓ % of such income subject to a ceiling limit of Rs. 15,000 [Section 57(iia)]
Any other expenditure (not being in the nature capital expenditure) laid out or expended wholly or exclusively for the purposes of making or earning such income. [Section 57(iii)]
Method of Accounting&
Tax
MERCANTILE
CASH SYSTEM
Due Basis
On receipt/payment basis
Any dividend declared, distributed or paid by a company to its shareholders is chargeable under this head.
Includes any distribution of:
company’s assets
debentures, debenture stock, deposit certificates and bonus to preference share holders
liquidation of company
reduction of capital
any payment made to a shareholder, holding substantial interest, in a closely held company
Dividend from domesticCompany EXEMPT
from lotteries, crossword puzzles, horse races, card games, gambling or betting
Winnings
Under Sec. 56(2)(ib), amount taxable is
WINNINGS
“Lottery” includes winnings from prizes awarded to any person by draw of lots or by chance.
Also includes game shows, entertainment programs on TV or electronic mode
Interest on any security of the Central/State Government.
Interest on debentures/other securities for money issued by/on behalf of a local authority/company
established by a Central/State/Provincial Act.
Section 56(2)(id)Section 56(2)(id)
Interest exempt from taxInterest exempt from tax
Interest on the following is exempt from tax:
Notified securities, bonds or certificates.
7 % Capital Investment Bonds
Interest received by a NRI from Notified Bonds
Interest payable to any foreign bank performing central banking functions outside India
Gold Deposit Bonds
Receipts without consideration
to be treated as income:
Following conditions are to be satisfied U/S 56(2)(vi):
The recipient is an individual/HUF
Any sum of money is received without consideration on or after April 1,2006
The aggregate amount received exceeds Rs 50,000
Permissible DeductionsPermissible Deductions
Commission/remuneration for realising dividend/interest on securitiesEmployee’s contribution towards staff welfare schemes
Repairs/Depreciation in let out of plant, machinery, furniture & building
Standard Deduction in the case of family pension
Other expenses for earning income
The Income Tax Department is The Income Tax Department is “trying”“trying” to to make make
“easier”“easier” for the tax payer!! for the tax payer!!
They are also trying to improve theirThey are also trying to improve their “image”“image”
Specific Disallowances U/S 58:Specific Disallowances U/S 58:
Personal Expenses
Interest
Salary
Wealth Tax
Amount Specified by Sec 40 A
Expenditure in respect of Royalty & Technical Fees received by a foreign CompanyExpenditure in respect of winnings from Lottery
YOUR INCOME
WHEN YOUEARNED IT
THETAXMAN
WHATYOU ARE
LEFTWITH
Be a responsible citizenand pay your taxes on time
(for listening)
Contact me on:
GOD-HELP-US
(463-4357-87)
Christopher Rodricks - 05A018 | Neville Unvalla – 05A031