Skip to content

CA Intermediate · Taxation · Income from Other Sources

Mr. Arjun Nair, a resident individual, received the following during the tax year 2026-27: (i) interest on a fixed deposit with a scheduled bank Rs 18,000 (gross); (ii) dividend of Rs 12,000 from an Indian company; (iii) winnings from a lottery Rs 50,000 (gross). He incurred Rs 2,000 as interest on money borrowed to buy the shares yielding the dividend. Ignoring other incomes, what is his income chargeable under the head Income from Other Sources, computed under the Income-tax Act, 2025 (deduction under the provision for interest expense on dividend income is limited to 20% of dividend)?

The income is Rs 78,000. Interest, dividend and lottery winnings total Rs 80,000, and interest paid to earn the dividend is deductible up to 20% of the dividend, which is Rs 2,400. Since actual interest is Rs 2,000, that amount is allowed, leaving Rs 78,000.

  1. ARs 78,000Correct
  2. BRs 80,000
  3. CRs 76,000
  4. DRs 30,000

Explanation

Interest Rs 18,000 + dividend Rs 12,000 + lottery Rs 50,000 = Rs 80,000. Interest expense against dividend is deductible up to 20% of dividend = Rs 2,400; actual Rs 2,000 is lower, so Rs 2,000 is allowed. Income = Rs 78,000. Rs 80,000 ignores the deduction; Rs 76,000 wrongly deducts twice.

Did you get it right without looking?

One question tells you little. A timed set on Income from Other Sources shows your real accuracy, how long you take and where you lose marks.

Practise Income from Other SourcesFree diagnostic mock

More Income from Other Sources questions