Direct and Indirect Taxation · Income from Other Sources

Income from Other Sources: Scope and Chargeability under Income-tax Act 2025

Updated 10 October 2026 · Fact-checked

Income from other sources is the residuary head of income. Under section 92, any income that is not exempt and does not fall under salaries, house property, business or profession, or capital gains is taxed here. Section 92(2) lists specific items such as dividends, winnings, interest on securities and certain gifts. To solve a question, test the other four heads first.

Understand Income from Other Sources: Scope and Chargeability

The Income-tax Act, 2025 classifies all income into five heads under section 13: Salaries, Income from house property, Profits and gains of business or profession, Capital gains, and Income from other sources. The fifth head is a catch-all. It exists so that no taxable income escapes the charge just because it does not fit the first four.

Section 92(1) says income of every kind that is not excluded from total income is chargeable under this head, if it is not chargeable under any head in section 13(a) to (d). So the order of thinking is: first, is the income exempt? Second, does it belong to heads (a) to (d)? Only if the answer to both is no does it land here.

Section 92(2) then lists specific incomes that are chargeable under this head, without limiting the general rule. These include any dividend, winnings from lotteries, crossword puzzles, races, card games and gambling or betting, interest on securities, income from letting machinery, plant or furniture on hire, forfeited advances in failed negotiations for transfer of a capital asset, interest on compensation, compensation on termination of employment or change in its terms, and certain receipts without or for inadequate consideration.

Note the conditions. Several items, such as interest on securities, hire of machinery, plant or furniture, employees' contributions to funds and keyman insurance receipts, are taxed here only if they are not chargeable under business or profession (and, for keyman insurance, also not under Salaries). Dividends, winnings and a few others have no such condition in the list. Always read the condition before you classify.

The head also covers sums received without consideration, or for less than fair value, above Rs. 50,000, subject to the exceptions in section 92(3), such as receipts from a relative, on marriage of the individual, under a will or by inheritance, and in contemplation of death. The detailed rules on dividends, gifts, interest on securities and winnings are studied in the separate topics.

Key rules to remember

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.

How to solve Income from Other Sources: Scope and Chargeability questions

Use this order for any question asking whether and where an income is taxed.

1List each receipt separately. Do not add them up yet.
2Check whether the receipt is exempt from total income. If it is, leave it out.
3Check whether it belongs to Salaries, House property, Business or profession, or Capital gains. If yes, tax it there.
4If not, check section 92(2) for a listed item. Read the condition attached, such as 'if not chargeable under business or profession'.
5For receipts without or for inadequate consideration, check the section 92(3) exceptions first: relative, marriage of the individual, will or inheritance, contemplation of death, local authority, registered non-profit organisation and the others listed.
6Apply the Rs. 50,000 limits and the stamp duty value or fair market value rules to find the taxable amount.
7Even if the item is not in the list, section 92(1) taxes it here if it is income and not exempt.
8Present a neat statement of income from other sources with a one-line reason for each item.

Quickest way: Four-question filter

When to use it: For MCQs and short questions where you must name the head or the taxable amount fast.

Is it exempt? If yes, nil.
Does it fit heads (a) to (d)? If yes, not this head.
Is it a section 92(2) item (dividend, winnings, interest on securities, gift above the limit)? Tax it here.
For gifts: relative or occasion exception first, then the Rs. 50,000 test on the total received. Remember it is all or nothing for money and for property without consideration.

Common mistakes in Income from Other Sources: Scope and Chargeability

Taxing only the excess over Rs. 50,000 when money is received without consideration.
Students treat Rs. 50,000 as a basic exemption.
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.
Students forget the exceptions in section 92(3) or apply the wrong definition of 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.
Putting interest on securities of a trader or financial business under Other Sources.
Students memorise the list and skip the condition.
Fix: Section 92(2)(e) applies only if the income is not chargeable under Profits and gains of business or profession.
Treating the head as limited to the section 92(2) list.
Students see 'in particular' as a closed list.
Fix: Section 92(2) is without prejudice to section 92(1). Any non-exempt income not in heads (a) to (d) is taxed here.
Using Income-tax Act, 1961 section numbers or the term assessment year.
Older books and notes are still in circulation.
Fix: Use the Income-tax Act, 2025: section 92 for this head, section 13 for heads, and tax year 2026-27.

Worked examples

Example 1

Mr. Arun Nair, a salaried individual, received in tax year 2026-27: (a) Rs. 40,000 cash from a friend, with no consideration; (b) Rs. 30,000 cash from another friend, with no consideration; (c) Rs. 2,00,000 from his brother. Compute the amount taxable under Income from other sources on these receipts.

Show the solution

Receipt (c) is from a relative (brother) under section 92(5)(g)(i)(B). Section 92(3)(a) excludes it from section 92(2)(m). Not taxable.
Receipts (a) and (b) are from non-relatives, without consideration. Section 92(2)(m)(i) looks at the total received in the tax year from all persons.
Total = Rs. 40,000 + Rs. 30,000 = Rs. 70,000.
Rs. 70,000 exceeds Rs. 50,000, so the whole sum is taxable, not just Rs. 20,000.

Answer: Rs. 70,000 is taxable under Income from other sources. The Rs. 2,00,000 from the brother is not taxable.

Example 2

Ms. Kavya Reddy bought a plot of land from an unrelated seller for Rs. 20,00,000. The stamp duty value on the date of the agreement fixing the consideration was Rs. 23,00,000, and she paid part of the consideration by bank transfer on or before that date. Registration took place later, when the stamp duty value was Rs. 24,00,000. Find the amount taxable under section 92(2)(m).

Show the solution

Under section 92(4)(a), if the agreement date and registration date differ, the stamp duty value on the agreement date applies, provided consideration (in whole or part) was paid in specified banking or online mode on or before the agreement date. That condition is met, so the value is Rs. 23,00,000.
Excess of stamp duty value over consideration = Rs. 23,00,000 − Rs. 20,00,000 = Rs. 3,00,000.
Threshold = higher of Rs. 50,000 and 10% of consideration. 10% of Rs. 20,00,000 = Rs. 2,00,000. The higher is Rs. 2,00,000.
Excess Rs. 3,00,000 is more than Rs. 2,00,000, so the condition is met.
The taxable amount is the stamp duty value that exceeds the consideration, that is the whole excess of Rs. 3,00,000.

Answer: Rs. 3,00,000 is taxable under Income from other sources for Ms. Kavya.

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.

Practice questions from Income from Other Sources

Income from Other Sources: Scope and Chargeability in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Income from Other Sources: Scope and Chargeability: frequently asked questions

Why is Income from other sources called the residuary head?

Section 92(1) taxes income of every kind that is not exempt and not chargeable under the first four heads in section 13. It catches whatever is left over. That is why it is called residuary.

Is dividend always taxed under Income from other sources?

Section 92(2)(a) lists any dividend as chargeable under this head, and the clause carries no condition about business income. Rates and other details are covered in the dividend topic.

Are all gifts above Rs. 50,000 taxable?

No. Section 92(3) exempts receipts from relatives, on the marriage of the individual, under a will or inheritance, in contemplation of death, and the other cases listed. Only gifts outside these exceptions, above the limits, are taxed.

Can the same income be taxed under Other Sources and business income?

No. Many clauses in section 92(2) apply only if the income is not chargeable under business or profession. If it is business income, it goes to that head.