Section 56 of Income Tax Act "Income from other sources"
56. (1) Income of every kind which is not to be excluded
from the total income under this Act shall be chargeable to
income-tax under the head "Income from other sources", if it
is not chargeable to income-tax under any of the heads
specified in section 14, items A to E.
(2) In particular, and without prejudice to the generality
of the provisions of sub-section (1), the following incomes,
shall be chargeable to income-tax under the head "Income
from other sources", namely :-
(i) dividends ;
(ia) income referred to in sub-clause (viii) of clause (24)
of section 2;
(ib) income referred to in sub-clause (ix) of clause (24) of
section 2;
(ic) income referred to in sub-clause (x) of clause (24)
of section 2, if such income is not chargeable to income-tax
under the head "Profits and gains of business or
profession";
(id) income by way of interest on securities, if the income
is not chargeable to income-tax under the head "Profits and
gains of business or profession";
(ii) income from machinery, plant or furniture belonging to
the assessee and let on hire, if the income is not
chargeable to income-tax under the head "Profits and gains
of business or profession";
(iii) where an assessee lets on hire machinery, plant or
furniture belonging to him and also buildings, and the
letting of the buildings is inseparable from the letting of
the said machinery, plant or furniture, the income from such
letting, if it is not chargeable to income-tax under the
head "Profits and gains of business or profession";
(iv) income referred to in sub-clause (xi) of clause (24) of
section 2, if such income is not chargeable to income-tax
under the head "Profits and gains of business or profession"
or under the head "Salaries";
(v) where any sum of money exceeding twenty-five thousand
rupees is received without consideration by an individual or
a Hindu undivided family from any person on or after the 1st
day of September, 2004 but before the 1st day of April,
2006, the whole of such sum :
Provided that this clause shall not apply to any sum of
money received-
(a) from any relative; or
(b) on the occasion of the marriage of the individual; or
(c) under a will or by way of inheritance; or
(d) in contemplation of death of the payer; or
(e) from any local authority as defined in the Explanation
to clause (20) of section 10; or
(f) from any fund or foundation or university or other
educational institution or hospital or other medical
institution or any trust or institution referred to in
clause (23C) of section 10; or
(g) from any trust or institution registered under
6[7[section 12AA]].].
Explanation.-For the purposes of this clause, "relative"
means-
(i) spouse of the individual;
(ii) brother or sister of the individual;
(iii) brother or sister of the spouse of the individual;
(iv) brother or sister of either of the parents of the
individual;
(v) any lineal ascendant or descendant of the individual;
(vi) any lineal ascendant or descendant of the spouse of the
individual;
(vii) spouse of the person referred to in clauses (ii) to
(vi);
(vi) where any sum of money, the aggregate value of which
exceeds fifty thousand rupees, is received without
consideration, by an individual or a Hindu undivided family,
in any previous year from any person or persons on or after
the 1st day of April, 2006 but before the 1st day of
October, 2009, the whole of the aggregate value of such sum:
Provided that this clause shall not apply to any sum of
money received-
(a) from any relative; or
(b) on the occasion of the marriage of the individual; or
(c) under a will or by way of inheritance; or
(d) in contemplation of death of the payer; or
(e) from any local authority as defined in the Explanation
to clause (20) of section 10; or
(f) from any fund or foundation or university or other
educational institution or hospital or other medical
institution or any trust or institution referred to in
clause (23C) of section 10; or
(g) from any trust or institution registered under
7a[8[section 12AA]].
Explanation.-For the purposes of this clause, "relative"
means-
(i) spouse of the individual;
(ii) brother or sister of the individual;
(iii) brother or sister of the spouse of the individual;
(iv) brother or sister of either of the parents of the
individual;
(v) any lineal ascendant or descendant of the individual;
(vi) any lineal ascendant or descendant of the spouse of the
individual;
(vii) spouse of the person referred to in clauses (ii) to
(vi);
(vii) where an individual or a Hindu undivided family
receives, in any previous year, from any person or persons
on or after the 1st day of October, 2009 but before the 1st
day of April, 2017,-
(a) any sum of money, without consideration, the aggregate
value of which exceeds fifty thousand rupees, the whole of
the aggregate value of such sum;
(b) any immovable property,-
(i) without consideration, the stamp duty value of which
exceeds fifty thousand rupees, the stamp duty value of such
property;
(ii) for a consideration which is less than the stamp duty
value of the property by an amount exceeding fifty thousand
rupees, the stamp duty value of such property as exceeds
such consideration:
Provided that where the date of the agreement fixing the
amount of consideration for the transfer of immovable
property and the date of registration are not the same, the
stamp duty value on the date of the agreement may be taken
for the purposes of this sub-clause:
Provided further that the said proviso shall apply only in a
case where the amount of consideration referred to therein,
or a part thereof, has been paid by any mode other than cash
on or before the date of the agreement for the transfer of
such immovable property;
(c) any property, other than immovable property,-
(i) without consideration, the aggregate fair market value
of which exceeds fifty thousand rupees, the whole of the
aggregate fair market value of such property;
(ii) for a consideration which is less than the aggregate
fair market value of the property by an amount exceeding
fifty thousand rupees, the aggregate fair market value of
such property as exceeds such consideration :
Provided that where the stamp duty value of immovable
property as referred to in sub-clause (b) is disputed by the
assessee on grounds mentioned in sub-section (2) of section
50C, the Assessing Officer may refer the valuation of such
property to a Valuation Officer, and the provisions of
section 50C and sub-section (15) of section 155 shall, as
far as may be, apply in relation to the stamp duty value of
such property for the purpose of sub-clause (b) as they
apply for valuation of capital asset under those sections :
Provided further that this clause shall not apply to any sum
of money or any property received-
(a) from any relative; or
(b) on the occasion of the marriage of the individual; or
(c) under a will or by way of inheritance; or
(d) in contemplation of death of the payer or donor, as the
case may be; or
(e) from any local authority as defined in the Explanation
to clause (20) of section 10; or
(f) from any fund or foundation or university or other
educational institution or hospital or other medical
institution or any trust or institution referred to in
clause (23C) of section 10; or
(g) from any trust or institution registered under
7a[8[section 12AA]].
(h) by way of transaction not regarded as transfer under
clause (vicb) or clause (vid) or clause (vii) of section 47.
Explanation.-For the purposes of this clause,-
(a) "assessable" shall have the meaning assigned to it in
the Explanation 2 to sub-section (2) of section 50C;
(b) "fair market value" of a property, other than an
immovable property, means the value determined in accordance
with the method as may be prescribed;
(c) "jewellery" shall have the meaning assigned to it in the
Explanation to sub-clause (ii) of clause (14) of section 2;
(d) "property" means the following capital asset of the
assessee, namely:-
(i) immovable property being land or building or both;
(ii) shares and securities;
(iii) jewellery;
(iv) archaeological collections;
(v) drawings;
(vi) paintings;
(vii) sculptures;
(viii) any work of art; or
(ix) bullion;
(e) "relative" means,-
(i) in case of an individual-
(A) spouse of the individual;
(B) brother or sister of the individual;
(C) brother or sister of the spouse of the individual;
(D) brother or sister of either of the parents of the
individual;
(E) any lineal ascendant or descendant of the individual;
(F) any lineal ascendant or descendant of the spouse of the
individual;
(G) spouse of the person referred to in items (B) to (F);
and
(ii) in case of a Hindu undivided family, any member
thereof;
(f) "stamp duty value" means the value adopted or assessed
or assessable by any authority of the Central Government or
a State Government for the purpose of payment of stamp duty
in respect of an immovable property;
(viia) where a firm or a company not being a company in
which the public are substantially interested, receives, in
any previous year, from any person or persons, on or after
the 1st day of June, 2010 but before the 1st day of April,
2017, any property, being shares of a company not being a
company in which the public are substantially interested,-
(i) without consideration, the aggregate fair market value
of which exceeds fifty thousand rupees, the whole of the
aggregate fair market value of such property;
(ii) for a consideration which is less than the aggregate
fair market value of the property by an amount exceeding
fifty thousand rupees, the aggregate fair market value of
such property as exceeds such consideration :
Provided that this clause shall not apply to any such
property received by way of a transaction not regarded as
transfer under clause (via) or clause (vic) or clause (vicb)
or clause (vid) or clause (vii) of section 47.
Explanation.-For the purposes of this clause, "fair market
value" of a property, being shares of a company not being a
company in which the public are substantially interested,
shall have the meaning assigned to it in the Explanation to
clause (vii);
(viib) where a company, not being a company in which the
public are substantially interested, receives, in any
previous year, from any person being a resident, any
consideration for issue of shares that exceeds the face
value of such shares, the aggregate consideration received
for such shares as exceeds the fair market value of the
shares:
Provided that this clause shall not apply where the
consideration for issue of shares is received-
(i) by a venture capital undertaking from a venture capital
company or a venture capital fund 9[or a specified fund]; or
(ii) by a company from a class or classes of persons as may
be notified by the Central Government in this behalf:
10[Provided further that where the provisions of this clause
have not been applied to a company on account of fulfilment
of conditions specified in the notification issued under
clause (ii) of the first proviso and such company fails to
comply with any of those conditions, then, any consideration
received for issue of share that exceeds the fair market
value of such share shall be deemed to be the income of that
company chargeable to income-tax for the previous year in
which such failure has taken place and, it shall also be
deemed that the company has under reported the said income
in consequence of the misreporting referred to in
sub-section (8) and sub-section (9) of section 270A for the
said previous year.]
Explanation.-For the purposes of this clause,-
(a) the fair market value of the shares shall be the value-
(i) as may be determined in accordance with such method as
may be prescribed; or
(ii) as may be substantiated by the company to the
satisfaction of the Assessing Officer, based on the value,
on the date of issue of shares, of its assets, including
intangible assets being goodwill, know-how, patents,
copyrights, trademarks, licences, franchises or any other
business or commercial rights of similar nature,
whichever is higher;
11[(aa) "specified fund" means a fund established or
incorporated in India in the form of a trust or a company or
a limited liability partnership or a body corporate which
has been granted a certificate of registration as a Category
I or a Category II Alternative Investment Fund and is
regulated under the Securities and Exchange Board of India
(Alternative Investment Fund) Regulations, 2012 made under
the Securities and Exchange Board of India Act, 1992 (15 of
1992);
(ab) "trust" means a trust established under the Indian
Trusts Act, 1882 (2 of 1882) or under any other law for the
time being in force;]
(b) "venture capital company", "venture capital fund" and
"venture capital undertaking" shall have the meanings
respectively assigned to them in clause (a), clause (b) and
clause (c) of Explanation to clause (23FB) of section 10;
(viii) income by way of interest received on compensation or
on enhanced compensation referred to in 12[sub-section (1)
of section 145B];
(ix) any sum of money received as an advance or otherwise in
the course of negotiations for transfer of a capital asset,
if,-
(a) such sum is forfeited; and
(b) the negotiations do not result in transfer of such
capital asset;
(x) where any person receives, in any previous year, from
any person or persons on or after the 1st day of April,
2017,-
(a) any sum of money, without consideration, the aggregate
value of which exceeds fifty thousand rupees, the whole of
the aggregate value of such sum;
(b) any immovable property,-
(A) without consideration, the stamp duty value of which
exceeds fifty thousand rupees, the stamp duty value of such
property;
(B) for a consideration, the stamp duty value of such
property as exceeds such consideration, if the amount of
such excess is more than the higher of the following
amounts, namely:-
(i) the amount of fifty thousand rupees; and
(ii) the amount equal to 13[five] per cent of the
consideration:
Provided that where the date of agreement fixing the amount
of consideration for the transfer of immovable property and
the date of registration are not the same, the stamp duty
value on the date of agreement may be taken for the purposes
of this sub-clause :
Provided further that the provisions of the first proviso
shall apply only in a case where the amount of consideration
referred to therein, or a part thereof, has been paid by way
of an account payee cheque or an account payee bank draft or
by use of electronic clearing system through a bank account
14[or through such other electronic mode as may be
prescribed], on or before the date of agreement for transfer
of such immovable property:
Provided also that where the stamp duty value of immovable
property is disputed by the assessee on grounds mentioned in
sub-section (2) of section 50C, the Assessing Officer may
refer the valuation of such property to a Valuation Officer,
and the provisions of section 50C and sub-section (15) of
section 155 shall, as far as may be, apply in relation to
the stamp duty value of such property for the purpose of
this sub-clause as they apply for valuation of capital asset
under those sections;
(c) any property, other than immovable property,-
(A) without consideration, the aggregate fair market value
of which exceeds fifty thousand rupees, the whole of the
aggregate fair market value of such property;
(B) for a consideration which is less than the aggregate
fair market value of the property by an amount exceeding
fifty thousand rupees, the aggregate fair market value of
such property as exceeds such consideration :
Provided that this clause shall not apply to any sum of
money or any property received-
(I) from any relative; or
(II) on the occasion of the marriage of the individual; or
(III) under a will or by way of inheritance; or
(IV) in contemplation of death of the payer or donor, as the
case may be; or
(V) from any local authority as defined in the Explanation
to clause (20) of section 10; or
(VI) from any fund or foundation or university or other
educational institution or hospital or other medical
institution or any trust or institution referred to in
clause (23C) of section 10; or
(VII) from or by any trust or institution registered under
15a[15b[section 12A or section 12AA]]; or
(VIII) by any fund or trust or institution or any university
or other educational institution or any hospital or other
medical institution referred to in sub-clause (iv) or
sub-clause (v) or sub-clause (vi) or sub-clause (via) of
clause (23C) of section 10; or
(IX) by way of transaction not regarded as transfer under
clause (i) or clause (iv) or clause (v) or clause (vi) or
clause (via) or clause (viaa) or clause (vib) or clause (vic)
or clause (vica) or clause (vicb) or clause (vid) or clause
(vii) of section 47; or
(X) from an individual by a trust created or established
solely for the benefit of relative of the individual;
16[(XI) from such class of persons and subject to such
conditions, as may be prescribed.]
Explanation.-For the purposes of this clause, the
expressions "assessable", "fair market value", "jewellery",
"property", "relative" and "stamp duty value" shall have the
same meanings as respectively assigned to them in the
Explanation to clause (vii).
(xi) any compensation or other payment, due to or received
by any person, by whatever name called, in connection with
the termination of his employment or the modification of the
terms and conditions relating thereto.
What is Reference to Valuation Officer? Section 55A of Income Tax Act 1961
What is Income from other sources? Section 56 of Income Tax Act 1961
What are Deductions? Section 57 of Income Tax Act 1961
What are the Amounts not deductible? Section 58 of Income Tax Act 1961
What is Cash credits? What are Unexplained investments? Section 68 and 69 of Income Tax Act 1961