Income from Other Sources - Meaning, Examples & Tax Rules

Income from Other Sources is one of the five main heads of income under the Indian Income Tax Act. It includes any money you earn that doesn't belong to the main categories, such as salary, house property, business, or capital gains.

Why is it called "Other Sources"?

Imagine your income split into categories, but there are certain income types, such as interest from savings accounts, winnings from lotteries, dividends from shares, gifts (above ₹50,000), etc. These types of income are all grouped together under “Income from Other Sources”. 

Contents

• 5 Heads of Income Under the Income Tax Act in India
• 10 Examples of Income from Other Sources
  • 1. Interest Income from savings accounts, FDs, RDs
  • 2. Dividends
  • 3. Family Pension
  • 4. Lottery, Gambling and Betting Winnings
  • 5. Gifts and Cash Prizes (beyond the exemption limit)
  • 6. Income from Royalties
  • 7. Commission and Brokerage Income
  • 8. Interest on Income Tax Refunds
  • 9. Income from Foreign Assets
  • 10. Income from Lease (of machinery, land, etc.)
• What is Taxable and What is Exempt Under This Head?
• Deductions Available Under Income from Other Sources
• How is Income from Other Sources Taxed?
  • Tax on Lottery, Gambling, and Game Show Winnings
• Conclusion
• Frequently Asked Questions (FAQs)

5 Heads of Income Under the Income Tax Act in India

Under the Indian Income Tax Act, an individual’s total income is classified into five main heads:

• Income from Salary

• Income from House Property

• Profits and Gains from Business or Profession

• Capital Gains
  Income from Other Sources

10 Examples of Income from Other Sources

According to Section 56 of the Income Tax Act, any income that does not fall under salary, house property, business or profession, or capital gains is taxed under the head Income from Other Sources. The following examples help you understand the types of income that are generally classified under the head “Income from Other Sources” as per the Income Tax Act.

1. Interest Income from savings accounts, FDs, RDs

Interest income is a common component of income from other sources. It includes interest earned on savings accounts, fixed deposits, recurring deposits, and other financial instruments. The interest income is added to the taxpayer's total income and taxed at the applicable slab rates.

2. Dividends

Income earned from dividends and Mutual Funds is considered under this head. Dividends from domestic companies, which were tax-free, are now taxed along with those from foreign companies.

3. Family Pension

Pension received by family members after the taxpayer’s demise is taxable under the head Income from Other Sources.

4. Lottery, Gambling and Betting Winnings

Any winnings from lotteries, card games, betting, or gambling are subject to taxation under this head. The tax rate is typically higher for such earnings, and the payer often deducts TDS (Tax Deducted at Source).

5. Gifts and Cash Prizes (beyond the exemption limit)

Gifts and cash prizes exceeding a specified limit are treated as taxable income under Income from Other Sources. However, certain gifts from relatives and on specific occasions may be exempted.

6. Income from Royalties

Authors, artists, and creators who receive royalties for their intellectual property fall under this category. Royalties are taxed at different rates based on the nature of the work and the agreement.

7. Commission and Brokerage Income

Income earned through commissions and brokerage is classified under this head. Whether it's a commission from stockbroking, real estate, or any other service, it is taxable.

8. Interest on Income Tax Refunds

Interest received on Income Tax refunds falls under the Income from Other Sources section. It is essential to report this income while filing tax returns.

9. Income from Foreign Assets

Income from overseas assets, including foreign bank accounts, investments, or properties, must be reported under the Income from Other Sources section and taxed accordingly.

10. Income from Lease (of machinery, land, etc.)

Lease income, such as leasing machinery, equipment, or land, is classified under this head for taxation.

What is Taxable and What is Exempt Under This Head?

While most incomes classified under Income from Other Sources are taxable, certain types of income are fully exempt from tax under the Income Tax Act.

• Scholarships: Money received as a scholarship for educational purposes is not taxable.

• Gifts from relatives: Gifts received from specified relatives are exempt from tax, irrespective of the amount.

• Agricultural income: Agricultural income is generally exempt from tax in India.

Deductions Available Under Income from Other Sources

The following deductions can be claimed on income earned under the head Income from Other Sources, subject to the conditions specified in the Income Tax Act.

1. Deduction on Interest Income Under Section 80TTA: If you're an individual (age of 60 years or less) or HUF, you can take a deduction of up to ₹10,000 annually on interest from all savings accounts (not fixed deposits or RDs).

2. Section 80TTB: Senior citizens (60 years and above) are not eligible for benefits under section 80TTA; Section 80TTB is exclusive to senior citizens. Thus, for elderly individuals, Section 80TTB provides a larger deduction of up to ₹50,000.

How is Income from Other Sources Taxed?

Income earned under the head Income from Other Sources is added to the taxpayer’s total income and taxed according to the applicable income tax slab rate. Eligible deductions and exemptions, if any, can be claimed before calculating the final tax liability.

Tax on Lottery, Gambling, and Game Show Winnings

Winnings from lotteries, gambling, or game shows are taxed at a flat rate of 30% under Income from Other Sources. The entire amount is taxable, and no deductions or exemptions can be claimed.
For example: If you win ₹1,00,000 in a lottery, tax is calculated on the full ₹1,00,000, and no expenses or tax-saving benefits can be deducted from it.

Conclusion

Understanding Income from Other Sources in Income Tax is crucial for every taxpayer. This head of income covers various sources of income not classified under salary, house property, etc. Staying informed on the “Income from Other Sources” tax rate and the Income from Other Sources format is critical for accurate filing. Given the types of income tax, understanding these income tax heads ensures compliance with and accurate reporting of taxable income in India.

Frequently Asked Questions (FAQs)

Here are some common questions about Income from other sources with respect to taxation in India.

1. What is the Income from Other Sources meaning in income tax?

It refers to any income that doesn't fall under the main categories, like salary, house property, or business income. 

2. How do you explain income from other sources in income tax?

Income from Other Sources in Income Tax refers to earnings that don't fit under the main Income Tax heads, such as interest, rental income, dividends, gifts, lottery winnings, and others listed in the Income Tax Act.

3. How to calculate income from other sources?

To calculate income from other sources, add all earnings like interest, rent, dividends, and prizes. Subtract any related expenses, and apply the applicable tax rate to the remaining amount.

4. Is agricultural income taxable under Income from Other Sources?

Agricultural income is usually exempt from tax. However, if total agricultural income exceeds a certain threshold, it may be combined with Taxable Income in India and taxed under the Income from Other Sources rules.

5. How are gifts and cash prizes taxed under Income from Other Sources?

Gifts and cash prizes exceeding a specified limit are taxable under Income from Other Sources in Income Tax. However, sure gifts from relatives or on special occasions may be exempt as outlined in the Income from Other Sources notes.

6. Are scholarships and fellowships taxable?

Scholarships and fellowships are not taxable under the Income Tax Act as long as they are received for educational purposes. 

7. What do you mean by Income Tax for Indian citizens?

Income Tax for citizens in India is a tax on the annual income earned by the citizens or businesses of India in a financial year.

8. Is Commission Income taxable under this head?

Yes, commission and brokerage income are included in Income from Other Sources and are taxed under this Income Tax Head, as detailed in types of income under Income Tax Heads.

9. What is the tax rate for lottery and gambling winnings?

Lottery and gambling winnings are subject to higher Income from Other Sources tax rates than regular income sources, with TDS often deducted by the payer, as noted in the Income from Other Sources list.

10. What is the total number of Heads of Income under Income Tax?

According to the Income Tax Act of India, the total number of Heads under Income Tax is five, dividing the income sources into different categories.

11. What is the difference between head of income and source of income?

The "head of income" is the category under which your income is taxed, like salary or business income. The "source of income" is where the income comes from, such as your job or renting property. 

12. Is dividend received from mutual funds taxable?

Yes, the dividend you receive from mutual funds is taxable in India. This means that the income you earn from dividends will be added to your total income and taxed according to the income tax slab rates that apply to you.

13. Is income from animal husbandry tax-free?

No, income from animal husbandry is not tax-free. It is taxable because it is not considered agricultural income, which has special tax exemptions. 

14. What are casual incomes? 

Casual incomes are one-time or irregular earnings that don't come from regular sources, such as winning a lottery or a prize. 

15. What are the 10 examples of income from other sources?

Here are 10 examples of income from other sources include interest on savings accounts, Interest on fixed deposits, Dividends from shares or mutual funds, Rent from letting out property, Gifts or prizes (like lottery winnings), Income from casual sales of assets, Royalty income, Income from a family pension, Income from a trust, and Income from non-agricultural land. 

Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making any related decisions.

Was this article helpful?

YesNo

Recent

Articles

How to Transfer a Car Insurance to a New Owner in India

Nikhila PS Dec 31, 2025

10 Tips to Reduce Your Car Insurance Premium

Team Acko Dec 30, 2025

How to Choose the Right Travel Insurance Policy?

Team Acko Dec 30, 2025

Moratorium Period in Life Insurance

Neviya Laishram Dec 29, 2025

Who is an Appointee in Life Insurance?

Neviya Laishram Dec 22, 2025

All Articles

Topics

Car Insurance

Travel Insurance

Life Insurance General

Individual Health Insurance

Individual Health Insurance

All Topics

Want to post any comments?