Income from Other Sources detail in ITR 1
It is a very common knowledge that Income Tax Department bifurcates income in 5 parts. These are salary, house property, business/ profession, capital gain & income from other sources.
While filing ITR 1 form 2017-18, many of us face confusion about what comes under income from other sources & this confusion lead to trouble. Trouble come in the form of penalty & interest notice from income tax department on non-disclosure of income.
Therefore, we present this blog to solve all your problems while filing ITR 1 form 2017-18.
What are Income from Other Sources?
As the name suggest, it includes all income earned by you from other sources. In simple words, if any income does not fall in the first 4 heads of income, it will come under this head.
Income from Other Sources in ITR 1 Sahaj Form
While filing ITR 1 online, you’ll have to disclose all the income from other sources as a total amount. As shown in the screenshot below, this disclosure has to be made under tab “Computation of Income & Tax” in the field “B3: Income from Other Sources (Ensure to Fill Sch TDS2)”.
Now, we know where to fill the income details, but the big question is
What type of income comes under Other Sources?
Section 56(2) of the Income Tax Act enlist certain incomes which are chargeable under head Income from Other Sources. For your convenience we have compiled the list of some popular income sources as below.
- Dividend Income: It’s the most common & preferred way of earning among investors. Dividend is nothing but a share of profit given to the members (shareholders) of company.
Although dividend given by an Indian company (in which public is interested) is exempt from tax in the hands of shareholders. But if the total income from dividend income exceeds ₹10 Lac then excess will be taxable @ 10% u/s 115BBDA & in this you will need to file ITR 2.
Dividend from foreign companies, deemed dividend u/s 2(22)(e) etc are taxable in the hands of shareholder.
- Interest Income: Keeping future in mind, we pool our savings & invest it to earn some income in the form of interest. Some popular methods are savings bank account, fixed deposits etc. Most of the interest incomes are chargeable to tax under head Income from Other Sources. But certain sections like 80TTA & 80TTB provide deduction on interest income from savings bank account etc.
- Family Pension Income: If you are receiving any pension income on behalf of a deceased family member. Then it’ll become taxable under this head. Though you can claim deduction of ₹15,000 or 1/3rd of the amount received, whichever is lower.
- Gifts Received: Gifts are fun! I love them & bet you love them to. But what if that gift become taxable in your hands? Bad feeling na? Any gift received, if it becomes taxable then it’ll be included under head “Income from Other Sources”. Taxability of such gifts depend upon the occasion it was given or it’s value. For e.g. if you have received any gifts on your marriage from anyone then they are exempt from tax. On the other hand, if someone (excluding relative) gives you a gift (on occasion other than marriage) & it’s value exceed ₹50,000 then it is taxable in your hands.
- Royalty Income: If you own some patents or have authored certain book (other than textbooks). Then any royalty income will be taxable under this head. You can claim deduction against such income u/s 80RRB & 80QQB.
- Winnings from lottery, puzzles, card games, horse races or any other game of betting/ gambling is taxable under this head. But in case of such income, return will be filed using ITR 2 & not ITR 1 Form Sahaj.
The above list shows the most common form of incomes which are taxable under head “Income from Other Sources”. But is not limited to these sources only.
Now, you must have noticed the line “Ensure to Fill “Sch TDS2””. What is this? What detail to be filled in this head? Let’s understand.
Ensure to Fill “Sch TDS2”
You can find this schedule in 4th tab “Tax Details”. Now, as the heading suggests, details of tax deducted under Form 16A are to be filled here.
Form 16A is a certificate which provide details of all the tax deduction made on income other than salary income. Therefore, you need to fill these details in order to claim tax credit while discharging tax liability.
This is how the Income from Other sources is shown in ITR 1 Form Sahaj. Now, the concepts of Income from Other Sources are vast. And the discussions are never ending.
To address concerns further, we have made a list 7 frequently asked questions.
Some Common FAQs
- Under which head pension income & family pension income are taxable?
Pension income is taxable under head “Income from Salary” while family pension income is taxable under head “Income from other Sources”.
- How to save tax on Fixed Deposits?
To save tax, make a fixed deposit with lock-in period of 5 years. Now, claim the amount of investment as deduction u/s 80C up to ₹1,50,000. But do note that interest received from such FD is taxable as income from other sources.
- Do I have to show interest income in ITR 1 if TDS is already deducted on it?
Yes, you should disclose interest income under head Income from Other Sources in ITR 1 irrespective of tax deduction and later claim the tax credit using Form 16A.
- Can I claim deduction of expenses incurred to earn Income from Other Sources?
Yes, you can claim deduction of such expenses provided they directly relate to such income.
- I received painting as a gift. Is it taxable?
Asset includes “painting” as per Income Tax Act and If the value of such gift exceeds ₹50,000 then it will be taxable under head Income form Other Sources.
- Do I have to pay tax on gifts received on occasion of marriage?
No, any gifts received (whether in cash or kind) on the occasion of marriage are totally exempt from income tax.
- On what amount I have to pay tax, if the value of gift is more than ₹50,000?
If you have received this gift on any occasion (other than marriage) & its value exceed ₹50,000. Then the whole amount will become taxable under head Income from Other Sources.
We hope now you’ll face no confusion while filing Income from Other Sources details in ITR 1.
Still, if you need any assistance from our eCAs, just get in touch with them. And keep following our blogs & social media pages for more e filing tips. Happy Filing 🙂