Income from Other Sources: formula sheet

Key formulas

Residuary rule

Chargeable under Other Sources = Income not exempt − income chargeable under heads (a) to (d) of section 13

Section 92(1). Test the first four heads before using this one.

Heads of income

Salaries; House property; Business or profession; Capital gains; Other sources

Section 13(a) to (e).

Sum of money received without consideration

If total received in the tax year from all persons > Rs. 50,000, the whole sum is taxable

Section 92(2)(m)(i). If the total is Rs. 50,000 or less, nothing is taxed. It is not only the excess.

Immovable property received without consideration

Taxable = stamp duty value, if stamp duty value > Rs. 50,000

Section 92(2)(m)(ii)(A).

Immovable property received for inadequate consideration

Taxable = stamp duty value − consideration, only if this excess > higher of Rs. 50,000 and 10% of consideration

Section 92(2)(m)(ii)(B). If the condition is met, the full excess is taxed.

Other property received without or for inadequate consideration

Without consideration: whole fair market value if aggregate > Rs. 50,000. For consideration: fair market value − consideration, if the difference > Rs. 50,000

Section 92(2)(m)(iii). Property means land, building, shares and securities, jewellery, archaeological collections, drawings, paintings, sculptures, works of art, bullion and virtual digital assets (section 92(5)(f)).

Compensation on termination of employment

Any compensation or payment on termination of employment or modification of its terms is chargeable under Other Sources

Section 92(2)(j), as given in the Act text.

Timing of dividend income

Declared, distributed or paid dividend → income of the tax year of declaration, distribution or payment. Interim dividend → income of the tax year it is unconditionally made available to the member.

This is section 7(2). For an interim dividend, the date of availability matters, not the date of declaration.

Dividend income of a resident (other sources)

Dividend income = Gross dividend − interest on borrowed money used to earn it (maximum 20% of the dividend) − commission or remuneration paid for realising it

No other expense is allowed. The 20% cap is on the dividend, not on the interest paid. The cap and the commission deduction are stated here without a section number, as they are not in the law text supplied. Confirm the section in your ICMAI study material.

Liquidation distribution (shareholder)

Capital gains consideration = Money received + market value of other assets on distribution date − amount assessed as dividend under section 2(40)(c)

Section 68(2). The company itself is not treated as making a transfer (section 68(1)).

Inter-corporate dividend deduction (domestic company)

Deduction = lower of (dividend received from domestic company, foreign company or business trust) and (dividend the company distributed at least one month before the due date of its return)

Section 148. Once allowed for an amount, it cannot be claimed for that amount in another tax year.

Non-resident or foreign company: dividend rate

Dividend: 20%. Dividend from an IFSC unit: 10%.

Section 207(1). Section 207 also disallows deductions under sections 28 to 58, 60, 61 and 93 when computing this income, so no expenses are allowed. If gross total income consists only of this income, no deduction is allowed under Chapter VIII and Schedule XV (section 207(6)(a)). If there is other income too, reduce gross total income by this income and compute the Chapter VIII deduction on the remaining amount (section 207(6)(b)).

Money received without consideration

If total received in the tax year > Rs. 50,000, the whole sum is taxable

Total from all persons is added. If the total is Rs. 50,000 or less, nothing is taxable. Once above, the whole amount is taxed, not just the excess.

Immovable property received without consideration

Taxable = stamp duty value, if stamp duty value > Rs. 50,000

The whole stamp duty value is taxed, not the excess over Rs. 50,000.

Immovable property received for consideration

Taxable = stamp duty value − consideration, if this excess > higher of (Rs. 50,000 or 10% of consideration)

If the excess is at or below the higher figure, nothing is taxable. If above, the full excess is taxed.

Other property received without consideration

Taxable = aggregate fair market value, if it exceeds Rs. 50,000

Applies only to the listed property: shares and securities, jewellery, archaeological collections, drawings, paintings, sculptures, works of art, bullion, virtual digital assets.

Other property received for inadequate consideration

Taxable = fair market value − consideration, if the difference > Rs. 50,000

Only the excess is taxed. The test is on the difference, not the total value.

Date of agreement rule for immovable property

Use stamp duty value on date of agreement if consideration was paid, wholly or partly, by specified banking or online mode on or before that date

Applies when agreement date and registration date differ.

Relatives of an individual

Spouse; brother or sister; spouse's brother or sister; brother or sister of either parent; lineal ascendants or descendants; lineal ascendants or descendants of spouse; and spouse of persons in the sibling, parent's sibling and lineal groups

For an HUF, any member is a relative. Cousins, friends and the spouse's parent's siblings are not listed.

Residual charge

Taxable here = income not exempt and not chargeable under heads in section 13(a) to (d)

Section 92(1). Check the other heads first.

Interest on securities

Section 92(2)(e): taxable here if not chargeable under Profits and gains of business or profession

Dealers in securities are taxed under business.

Machinery, plant, furniture letting

Section 92(2)(f) and (g): taxable here if not business income

Clause (g) covers buildings whose letting is inseparable from the machinery letting.

Winnings

Taxable winnings = gross winnings, with no deduction

Section 92(2)(b) charges them and section 94(4) bars all deductions. Horse-owner exception in section 94(5).

Termination compensation

Section 92(2)(j): compensation on termination or modification of employment terms is charged here

For managers of companies, agents or contract parties, section 26(2)(b) makes it business income.

Deductions allowed

Sections 29, 35(b)(i) and 36 apply; personal expenses and specified unpaid foreign payments are barred (section 94(1))

Collection charges on interest are a common allowed item.

Collection commission (section 93(1)(a))

Deduction = reasonable commission or remuneration paid to a banker or other person for realising interest on securities

Only for interest on securities. Dividend is no longer covered. The sum must be reasonable.

Family pension deduction, section 202(1) regime (section 93(1)(d)(i))

Lower of (1/3 × family pension) and ₹25,000

Applies where tax is computed under section 202(1).

Family pension deduction, any other case (section 93(1)(d)(ii))

Lower of (1/3 × family pension) and ₹15,000

Family pension is a regular monthly amount paid by the employer to a family member after the employee's death.

General expenses (section 93(1)(e))

Allowed if revenue in nature and wholly and exclusively for earning the income

Capital expenditure is not allowed.

Dividend and specified fund units (section 93(2))

Deduction = nil

Covers dividend, income from specified mutual fund units and specified UTI company units. No interest deduction is available from 1-4-2026.

Winnings (section 94(4))

Deduction = nil

Applies to lotteries, crosswords, races, card games, other games, gambling, betting. Section 94(5) exempts the owner of race horses for the activity of owning and maintaining them.

Amounts not deductible (section 94(1))

Personal expenses; interest payable outside India without tax paid or deducted; salary payable outside India without tax paid or deducted

Tax under Chapter XIX-B.

Tax on casual winnings (section 194, Sl. No. 1)

Tax = 30% × winnings + tax on (total income − winnings)

Applies to lottery, crossword puzzle, race including horse race, card game and other games, gambling or betting. The winnings are not an item that gets slab rates.

Online game winnings (section 194, Sl. No. 5)

Tax = 30% × net winnings from online game, computed as prescribed

The Table refers to net winnings computed in the prescribed manner. Do not compute them yourself unless the question gives the net figure.

No deduction rule (section 94(4))

Taxable winnings = gross winnings (no expenditure or allowance deducted)

Section 94(4) bars deduction of ticket cost, entry fee and bet stakes when computing income from winnings of the kind in Sl. No. 1. Section 94(5) excepts the owner of race horses from this bar for owning and maintaining horses.

Two-part computation (section 194(1))

Tax = (a) tax on winnings at the Table rate + (b) tax on total income reduced by the winnings

Part (b) uses the normal rates applicable to the assessee. Column E (conditions) is Nil for Sl. No. 1 and 5. Other Table items, such as Sl. No. 2, 3 and 4, carry their own column E conditions.

Other special-rate items in section 194

Patent royalty 10%; carbon credits 10%; virtual digital asset transfer 30%; life insurance business profits 12.5%

Each item has its own column E condition. Patent royalty is for a resident patentee on a patent developed and registered in India, with conditions. Carbon credits and VDA income carry no-deduction conditions; for VDA only cost of acquisition is allowed and losses cannot be set off.

Quick revision

• Income from Other Sources is the residuary head: taxable, not exempt, and not under any other head.
• Check the other four heads first before placing an income here.
• Specific inclusions such as dividends and winnings are taxed here even where other rules might seem to apply.
• For gifts, always check the donor, the relationship, the nature of the asset and the value against the stated threshold.
• Receipts from specified relatives and on specified occasions are outside the gift rules; confirm the exact list before answering.
• Winnings from lotteries, games and similar sources are taxed at a special rate without the usual deductions.
• Only expenses allowed by the Act can be deducted; personal expenses and capital expenses cannot.
• Write the head of income clearly in every answer, as it earns marks.
• Use the tax year and Income-tax Act, 2025 terms and section numbers, never assessment year.
• In MCQs, read every condition word in the question before choosing an option.

Common mistakes

• Taxing only the excess over Rs. 50,000 when money is received without consideration. Fix: Under section 92(2)(m)(i), if the total exceeds Rs. 50,000, the whole sum is taxed. If it is Rs. 50,000 or less, nothing is taxed.
• Taxing a gift received from a relative. Fix: Check section 92(5)(g). A spouse, siblings, parents' siblings, lineal ascendants and descendants, the spouse's side and their spouses are covered for an individual. Cousins and friends are not.
• Deducting all the interest paid on a loan taken to buy shares. Fix: Cap the interest at 20% of the dividend. Compute 20% first and compare it with the actual interest. Take the lower.
• Taxing an interim dividend in the tax year of declaration. Fix: For an interim dividend, use the tax year in which the amount is unconditionally made available to the member.
• Taxing only the excess over Rs. 50,000 on cash gifts. Fix: If the total exceeds Rs. 50,000, the whole sum is taxable. If it is Rs. 50,000 or less, nil.
• Treating all gifts from friends or cousins as exempt. Fix: Use the defined list only. Cousins and friends are not relatives, so their gifts are tested against the limit.
• Deducting expenses from lottery or game winnings. Fix: Section 94(4) allows no deduction. Tax the full amount, even if a ticket cost or a loss exists.
• Taxing interest on securities here for a person whose business is dealing in securities. Fix: Clause (e) applies only if the income is not chargeable as business income. Check the facts.
• Deducting collection commission against dividend. Fix: From 1-4-2026 the commission deduction is for interest on securities only. Dividend gets no deduction.
• Deducting interest on money borrowed to buy shares from dividend income. Fix: Section 93(2) now allows no deduction on dividend income.

Exam tips

• In MCQs, the usual traps are the all-or-nothing Rs. 50,000 limit and the relative exception. Check these before calculating.
• In written answers, state the section 92 reference and the head reasoning in one line before the figure. Step marks follow the reasoning.
• Always read the condition in each section 92(2) clause. Questions often make a receipt part of a business to test whether you move it to the business head.
• For immovable property, compare the excess with the higher of Rs. 50,000 and 10% of consideration. Show this comparison explicitly.
• Use 2025 Act terms: tax year, and section 92 and section 13. Avoid assessment year.
• Write the tax year and the section numbers of the Income-tax Act, 2025. Examiners expect section 7(2), section 68, section 148 and section 207 where relevant.
• Show the 20% interest cap as a separate line in every resident computation. It earns a step mark.
• For MCQs, read the recipient first. The options often differ only in whether expenses or a section 148 deduction apply.