CS Executive · Tax Laws and Practice

Income from Other Sources: formula sheet

Full chapter guide

Key formulas

General charge (residuary rule): Chargeable under other sources if: income is not exempt AND not chargeable under section 13(a) to (d); Section 92(1). Always test the other heads first.
Specific incomes under section 92(2): Dividend; winnings from lotteries, crossword puzzles, races, card games, other games, gambling or betting; interest on securities; compensation on termination of employment; interest on compensation under section 278(1); and others in the list; Chargeable here without limiting section 92(1).
Business-income conditional items: Interest on securities; letting of machinery, plant or furniture; keyman insurance; employees' fund contributions: other sources only if not chargeable under business or profession; Where the Act gives this condition, business treatment takes priority.
Winnings and deductions: Section 94(4): no deduction for any expenditure or allowance related to winnings from lotteries, games, gambling or betting; Section 94(5): does not apply to a horse owner's income from owning and maintaining horses for races.
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; Applies irrespective of section 93.
Gift-type receipts (section 92(2)(m)): Money without consideration: whole sum if total exceeds ₹50,000 in the tax year; Detailed rules for property and exceptions belong to the gifts topic.
Charge of dividend: Dividend → Income from other sources [section 92(2)(a)]; Taxed at the recipient's applicable rates. Dividend is taxed under this head, not as business income, unless the law says otherwise.
Charge of winnings: Winnings from lotteries, crossword puzzles, races, card games, games of any sort, gambling or betting → Income from other sources [section 92(2)(b)]; Taxed at a special flat rate, not slab rates. The rate is not in sections 92 or 94, so take it from your study material for the year.
No deduction against winnings: Taxable winnings = Gross winnings (no expenditure or allowance deducted) [section 94(4)]; Ticket cost, entry fee and travel are all ignored. The only exception is the owner of racehorses for that activity [section 94(5)].
Limits on deductions against dividend: Not deductible: personal expenses [94(1)(a)]; certain interest or salary payable outside India without tax paid or deducted under Chapter XIX-B [94(1)(b), (c)]. Sections 29, 35(b)(i) and 36 apply as for business income [94(2)]; Section 94 restricts section 93. Do not use a fixed percentage cap on interest unless the question or your study material gives one.
Deemed dividend on loan to shareholder: Deemed dividend = Loan or advance, limited to accumulated profits; Applies where the shareholder holds at least 10% of the voting power and is also the beneficial owner of the shares. Accumulated profits are those on the date of the loan.
Net taxable dividend: Taxable dividend = Gross dividend − deductions allowed under section 93 (after the section 94 restrictions); Strike out personal expenses first. Then deduct only the expenses the question treats as allowable.
Money received without consideration: If total money received in the tax year > Rs. 50,000, the whole sum is taxable; Section 92(2)(m)(i). It is a cliff, not a slab. If total is Rs. 50,000 or less, nothing is taxed. Total is counted across all givers in the year.
Immovable property received without consideration: If stamp duty value > Rs. 50,000, the stamp duty value is taxable; Section 92(2)(m)(ii)(A). The whole stamp duty value is taxed, not the excess over Rs. 50,000.
Immovable property received for inadequate consideration: Taxable = stamp duty value − consideration, if (stamp duty value − consideration) > higher of Rs. 50,000 or 10% of consideration; Section 92(2)(m)(ii)(B). Only the excess is taxed. Compare the excess with the higher of the two limits.
Other property received without consideration: If aggregate fair market value > Rs. 50,000, the whole aggregate fair market value is taxable; Section 92(2)(m)(iii)(A). Aggregate is of all such property received in the tax year.
Other property received for inadequate consideration: Taxable = aggregate fair market value − consideration, if (aggregate FMV − consideration) > Rs. 50,000; Section 92(2)(m)(iii)(B). No 10% test here. Only the excess is taxed.
Date of agreement rule for immovable property: Use stamp duty value on the date of agreement if agreement date and registration date differ and consideration (whole or part) is paid by specified banking or online mode on or before the agreement date; Section 92(4)(a). Without such payment, the value on the date of registration applies in practice.
Relative (individual): Spouse; brother or sister; brother or sister of spouse; brother or sister of either parent; lineal ascendant or descendant; lineal ascendant or descendant of spouse; spouse of any of the persons from brother or sister onward; Section 92(5)(g). For a Hindu undivided family, any member is a relative.
Residual head rule: Taxable under Other Sources if: not exempt AND not under section 13(a) to (d) heads; Section 92(1). Always test the other heads first.
Interest on securities: Taxed under Other Sources if not chargeable as business income; Section 92(2)(e). A securities dealer or bank taxes it as business income.
Hire of plant, machinery, furniture: Hire income (plus inseparable building letting) is taxed under Other Sources if not business income; Section 92(2)(f) and (g). Letting only a building is not covered here.
Keyman insurance: Sum including bonus is taxed under Other Sources if not taxable as business income or salary; Section 92(2)(d). Section 26(2)(i) taxes the same sum as business income.
Termination of employment compensation: Compensation for termination or modification of employment terms is taxed under Other Sources; Section 92(2)(j). For managing a company, agency or business contract, see section 26(2)(b).
Forfeited advance: Advance forfeited AND negotiations fail to result in transfer of the capital asset = Other Sources; Section 92(2)(h). Both conditions must hold.
Interest on compensation: Interest on compensation or enhanced compensation under section 278(1) is taxed under Other Sources; Section 92(2)(i).
Collection charges on interest on securities: Deduction = reasonable commission or remuneration paid to a banker or other person for realising the interest; Section 93(1)(a). From 1-4-2026 it covers interest on securities only, not dividends.
Family pension deduction: Deduction = lower of (1/3 × family pension) and ₹25,000 (section 202(1) regime) or ₹15,000 (any other case); Section 93(1)(d). Family pension is a regular monthly amount paid by the employer to a family member after the employee's death.
General expense deduction: Allowed: revenue expenditure wholly and exclusively for making or earning the income; Section 93(1)(e). Capital expenditure is not allowed.
Dividend and specified fund unit income: Deduction = nil; Section 93(2). Covers dividend, income from specified mutual fund units and specified UTI company units. No interest deduction.
Gambling-type winnings: Deduction = nil; Section 94(4). Lotteries, crosswords, races, card games, betting. Exception under 94(5) for owners of race horses maintained for racing.
Income from letting machinery, plant or furniture: Deductions as per section 28(1)(a), (b), (d), section 33 (depreciation), subject to section 28(2); Section 93(1)(c), as far as may be. Applies to income under section 92(2)(f) and (g).
Other receipts with fixed deduction: Income under section 92(2)(i): deduction = 50% of such income, and no other deduction; Section 93(1)(f). Check the Act for what this clause covers before quoting it.
Fully deducted receipts: Commutation of pension from a Schedule VII fund and gratuity on the employee's death: entire amount deducted; Section 93(1)(g) and (h).
Income from other sources: Taxable receipts (gifts + dividend + interest + winnings + other items) – allowed deductions; Work item by item. Never deduct one item's expense from another item.
No deduction for winnings: Income from winnings = gross winnings; Applies to lotteries, crosswords, races, card games, other games, gambling and betting. Section 94(4).
Horse-owner exception: Race-horse owner: winnings – maintenance expenses allowed under section 94(2); Section 94(5) switches off section 94(4) only for the activity of owning and maintaining horses for races. The expenses are then tested under sections 29, 35(b)(i) and 36 as applied by section 94(2).
Non-deductible items: Personal expenses = nil deduction; Section 94(1)(a). Interest or salary payable outside India is also disallowed unless tax has been paid or deducted.
Gift test: Gift from relative or on marriage = not taxed; gift from any other person = test against the limit in the gift provision; Take the exact limit and exempt categories from your study material. Do not assume a figure from memory.
Deductions against other receipts: Deduction = only expenses the Act allows under this head; Section 94(2) applies sections 29, 35(b)(i) and 36. Personal expenses are never allowed. If the question gives no allowable expense, take the receipt gross.

Quick revision

Section 92(1): residual head for income that is not exempt and not under the other heads.
Dividend and winnings from lotteries, crossword puzzles, races, card games and gambling are taxed here under section 92(2).
Game shows and television competitions with prizes count as card games and other games of any sort.
Interest on securities is taxed here only if not taxed as business income.
Compensation on termination of employment or modification of its terms is taxed here under section 92(2)(j).
A forfeited advance received during negotiations for transfer of a capital asset is taxed here if the transfer does not happen.
Money received without consideration is taxable in full if the total in the tax year exceeds Rs. 50,000.
Immovable property received for less than stamp duty value is taxed on the excess only if it exceeds the higher of Rs. 50,000 or 10% of the consideration.
Gifts from relatives, on marriage, by will or inheritance, or in contemplation of death are outside the gift rule.
Under section 94(4), no expenditure is deductible against winnings from lotteries and games.
Section 94(5): the bar does not apply to the owner of horses maintained for races, for that activity.
Personal expenses are never deductible under this head.

Common mistakes

Treating other sources as the first head to test. Fix: Remember it is residuary. Rule out the other heads first, then apply section 92.
Treating section 92(2) as a closed list. Fix: Section 92(2) is without prejudice to section 92(1). Other income not in the list can still be taxed here.
Deducting the cost of the lottery ticket or entry fee from winnings. Fix: Remember section 94(4): no deduction of any expenditure or allowance against winnings. Tax the gross amount.
Treating the full loan to a shareholder as deemed dividend. Fix: Deemed dividend is the lower of the loan and the company's accumulated profits on the date of the loan.
Taxing only the amount above Rs. 50,000 on money or free property. Fix: For receipts without consideration the whole amount is taxed once the limit is crossed. Rs. 50,000 or less is nil; above it, everything.
Testing each gift separately for money. Fix: The law refers to the total received in the tax year from any person or persons. Add all non-exempt money gifts before testing.
Taxing a securities dealer's interest under Other Sources. Fix: Section 92(2)(e) applies only if the income is not chargeable as business income. Check whether the assessee is in the business.
Taxing rent from letting machinery with its building under House Property. Fix: If the building letting is inseparable from the letting of machinery, plant or furniture, the whole income falls under section 92(2)(g).
Claiming interest on a loan against dividend income, up to 20% of the dividend. Fix: From 1-4-2026 section 93(2) allows no deduction against dividend or specified unit income. Claim nothing.
Allowing commission for collecting dividends. Fix: Clause (a) now mentions interest on securities only. Do not deduct collection charges on dividends.

Exam tips

Begin every answer with the residuary logic: not exempt, not under section 13(a) to (d), therefore section 92.
Cite section 92(2) with the clause letter where you can. Cite section 94(4) whenever winnings are in the question.
Look for the condition "if not chargeable under business or profession". Question facts often hint that the person is in business.
In case-based questions, use three parts: provision, application to the facts, and conclusion.
Use the actual definitions: game shows are within "card game and other game of any sort" under section 92(5)(b).
Always cite section 92(2)(a) or 92(2)(b) in the first line. ICSI markers look for the provision before the working.
Quote section 94(4) by number when you deny a deduction against winnings. Mention the racehorse-owner exception in section 94(5) if the question gives horses.
In deemed dividend problems, write the three tests in order: type of payment, 10% voting power, accumulated profits. Marks are given for each test.