Income from Other sources such as interest of Saving Bank Account, Fixed Deposit, Recurring Deposit, Senior Citizen Saving Scheme(SCSS) needs to be shown in the Income Tax return. This article explains Income from Other sources, with picture, what kind of income comes under this head, whether TDS is deducted or not, how to show it Income Tax Return with specific cases of common income such as Saving Bank Account,Fixed Deposit, RD, SCSS, Infrastructure bonds in 80CCF.
Table of Contents
Overview of Income from Other Sources in ITR
Earlier (FY 2017-18 or AY 2018-19) ITR-1 asked for only the total amount of ‘Income from other sources’, but from FY 2018-19 or AY 2019-20 year you will have give a detailed break-up. The image below shows the Income form Other Sources in ITR1.
- Any income which does not fall under the heads of Salary, House Property, Business & Profession and Capital Gain will fall under the head Income from Other Source.
- In ITR1 for FY 2018–19 or AY 2019–20 the Income from other sources is shown in the image below. it consists of Interest from Saving Bank account, Interest from Deposit(Fixed/Recurring of Bank/Post office/Cooperative Society), Interest from Income Tax Refund and Any other
Interest from Saving Account: Income from Other Sources in ITR
Saving Bank interest, however small the amount, is your income. Find interest on all your saving bank accounts by going through you bank statements. Show the total amount in your ITR in Income from Other sources. You can also get Interest certificate from the bank.
Claim 80TTA deduction for Interets on Saving Account
- No tax is deducted(TDS) on Interest of Saving Bank account.(yet)
- From FY 2012-13 (AY 2013-14) year section 80TTA has been introduced for which deduction up to an extent of Rs 10,00 in interest from all the bank accounts is allowed to an individual or Hindu undivided family,
- Interest over Rs 10,000 will be taxed at the tax rate of an individual. Section 80TTA is shown in Deductions under Chapter VI-A along with 80C, 80D
- Section 80TTA is shown in Deductions under Chapter VI-A along with 80C, 80D. Our article Interest on Saving Bank Account : Tax, 80TTA discusses it in detail.You need to add interest from all your saving accounts to Income from other sources and then claim deduction under section 80TTA. If your total interest income from ALL your saving bank accounts
- is less than or equal to Rs 10,000 For example if your interest from ALL saving bank accounts is Rs 7,000 you need to show 7000 in income from other sources and then show Rs 7000 for section 80TTA
- is more than Rs 10,000 say 15,000 then add 15,000 to Income from other sources and then show Rs 10,000 in Section 80TTA
Interest on Fixed Deposit and Income from Other Sources and ITR
Interest on Fixed Deposit is taxable as Income from other sources on the entire amount whether TDS is deducted or not. When TDS is deducted you will be issued Form 16A to show the total interest and TDS. It would also be reflected in Form 26AS.(whether interest is deducted or not). Image below shows interest on FD where no TDS is deducted.
Show the entire interest earned in FD in the Financial year to income from other sources. Take the value from Form 26AS.
If you multiple FDs then get interest earned in all the FDs and then show the sum in ITR.
TDS & interest on Fixed Deposit
TDS is deducted on interest in Fixed Deposit if
- @10%: If the Interest income in a financial year is more than Rs 10,000 and PAN submitted: For example if interest is 20,000 , TDS deducted will be Rs 2,000(10% of 20,000)
- @20%: If the Interest income in a financial year is more than Rs 10,000 and PAN is not submitted: If you have not submitted PAN details, any interest beyond the limit, the TDS would be deducted @ 20% p.a
- If Form 15G or Form 15H submitted then No TDS would be deducted and your Form 26AS will show the Form H submitted details.
if TDS is deducted show it in TDS2 schedule as shown in the picture below for Mr S Khan from our articlewhich covers it.
Recurring Deposits, Post office Monthly Income Scheme, Term Deposits
In case of Recurring Deposits, Post office term deposits interest earned is taken as Income from Other Sources and is taxed. Our article Overview of Recurring Deposits covers Recurring Deposits in detail.
Senior Citizen Scheme
If the interest income in a year is more than Rs 10,000, then the TDS (tax deducted at source) is cut. So it is treated in the same way as Fixed Deposit.
Family Pension means a regular monthly amount payable to a person belonging to the family of a person in the event of his death. For example an employee died on job and his family is getting pension from EPS.
Family pension is taxable as income from other sources and a standard deduction of 1/3rd of pension or Rs 15,000 whichever is less is allowed. Steps to find Deduction amount from Pension.
- Find 1/3 of pension amount.
- Check if it is less than 15,000. If yes then deduction amount is 1/3 of pension amount else it is 15,000
- Deduct the pension amount from the pension.
- Show the amount in the earlier Step as Income from Other Sources.
Income from Infrastructure Bonds
In the FY 2010-11, FY 2011-12 additional income tax benefit of 20,000 was made available under section 80CCF of the Income Tax Act, 1961 for investments made in long-term infrastructure bonds (as notified by the Central Government). This deduction limit of 20,000 will be over and above 1,00,000 benefit available under section 80C, 80CCC and 80CCD. This move was intended to provide a fillip to the infrastructure finance and provide an opportunity to individual tax payers to reduce their tax liability. The interest received on these bonds shall be treated as income from any other source and shall form part of the total income of the assessee in that financial year in which they are received. If you had invested in infrastructure bonds then you can check whether interest was paid to you by checking Onemint Interest Payment Dates of Infrastructure Bonds Issued in 2011-12
What is Income from Other Sources ?
Income earned during the year can be classified into categories like :
- Income from Salary
- Income from House Property
- Income from Business & Profession
- Income from Capital Gain
- Income from Other Sources :Any income which does not fall under the heads of Salary, House Property, Business & Profession and Capital Gain will fall under the head Income from Other Source. Hence, this is the residuary head of income.
This income is NOT exempt i.e it is taxable under the Income Tax Act 1961. Section 56 deals with this residuary head of income and covers all such taxable income. You are required to enter data of all income earned by you during the year. Our article Exempt Income and Income Tax Return
What are examples of Income from Other Sources ?
Sub-section 2 to section 56 enumerates various types of income which would be chargeable to tax under Income from Other Sources. Some examples of certain incomes normally taxed under this head are given below:
- Dividend: Dividend is chargeable at a rate of 10% if aggregate amount of dividend during that year exceeds Rs. 10,00,000. This is applicable for individuals/HUFs. If the dividend is received from a domestic company and it is chargeable under dividend distribution tax, then it will be exempted.
- One-time income: Income from lotteries, crossword puzzles, horse races, games, gambling or betting.
- Interest on securities if it is not taxable under “Profits and Gains of Business or Profession”.
- Income from machinery, plant or furniture belonging to taxpayer and let on hire. This is applicable if income is not chargeable to tax under the head ‘Profits and Gains of Business or Profession’.
- Composite rental income from letting of plant, machinery or furniture with buildings, where such letting is inseparable. Again, this is applicable if this income is not taxable under the head ‘Profits and Gains of Business or Profession’.
- Interest received from IT Dept. on delayed refunds,
- Income from royalty,
Examiner-ship fees received by a teacher (not from employer),
- Any sum exceeding Rs. 50,000 received without consideration shall be treated as income provided that the sum of money is not received from any relative or on the occasion of the marriage of the individual or under a will or inheritance etc.
- If an employee receives any compensation due to the termination of his employment or modification of terms and conditions relating to the job, then that amount will be taxable.
- Any sum of money received as an advance or otherwise in the course of negotiations for transfer of a capital asset shall be charged to tax under this head, if:
- a) Such sum is forfeited; and
- b) The negotiations do not result in transfer of such capital asset.
Income from Other Sources in ITR2
In ITR2 For Income from other sources one has to fill Schedule-OS, shown in picture below
- (i) Against item 1a and 1b, enter the details of gross income by way of dividend and interest which is not exempt.
- (ii) Against item 1c, indicate the gross income from machinery, plant or furniture let on hire and also such income from building where its letting is inseparable from the letting of the said machinery, plant or furniture, if it is not chargeable to income-tax under the head Profits and gains of business or profession.
- (iii) Income from owning and maintaining race horses is to be computed separately as loss from owning and maintaining race horses cannot be adjusted against income from any other source, and can only be carried forward for set off against similar income in subsequent years.
- (iv) Winnings from lotteries, crossword puzzles, races, games, gambling, betting etc., as per section 115BB are to be entered on gross basis and are subject to special rates of tax; hence a separate item is provided and the income from these cannot be adjusted against the losses arising under the head Income from other sources.
- (v) Item 5 of this Schedule computes the total income chargeable under the head “Income from other sources” (item 3 + item 4c). If balance in item 4c which shows income from owning and maintaining race horses is a loss, please enter 0 and enter the total of item 3.
Most of us would have interest on saving bank account, fixed deposits, recurring deposits ,company deposits which we need to add together and fill in Interest Gross 1(b). How to handle interest on saving bank account, fixed deposit etc are explained later in article. ITR2 with all the income is shown below
- Fixed Deposits and Tax
- Exempt Income and Income Tax Return
- How to Calculate Income Tax
- Viewing Form 26AS on TRACES
Irrespective of whether income is taxable or exempt from tax, you should disclose it in your return. This article explains Income from Other sources, what it is how, how to show it Income Tax Return. In case of cumulative deposit scheme which span multiple financial year, Fixed Deposits, Recurring Deposits etc is is recommended that you show interest income earned every financial year.