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Deductions acceptable in computing income from other sources

Deductions from other sources

Income Tax Act has specifically laid out deductions acceptable in computing income from other sources. The income that can be computed from 'other' sources can be  amount received as rent or puzzles, horse races, television games, shows in which people, winners win prizes or maybe benefits received by the employee from his employer and is not shown as a business income, Interest received from banks from saving bank accounts, Gifts received from others which exceed a value of Rupees Fifty Thousand. Pension received from LIC, Interest received on any kind of compensation, tuition fees and examination fees received by an individual who is not engaged in a profession or maybe Interest on tax refunds and much more. Described below is which deductions are acceptable in computing income from other sources.
All these ways mentioned above are a very small part of the income that is considered to be generated from other sources. You can also say that almost everything that is earned by you will be considered as an income and deductions will be made but only if the computing income is tax chargeable.

ACCEPTABLE DEDUCTIONS IN COMPUTING INCOME ARE AS FOLLOWS;

(IN CASE OF OTHER SOURCES)

  1. Computing Income from giving out furniture, machinery, and plant, then following expenses will be considered as deductions-
  • The amount that is spent on repair and/or maintenance of plant, furniture, and machinery.
  • The amount that is paid as insurance against the risk of damages of the plant, machine, and furniture.
  • The amount of depreciation (Reduction in value of Asset over a course of time) that is allowed as per Indian Income Tax Act.
  1. In the case of a family pension, a deduction of Thirty-three point five percent of that amount or Rupees fifteen thousand is acceptable; provided that the amount to be considered will be the less one.
  2. Any Expenditure other than any kind of Capital Expenditure, incurred for making such earnings.
  3. Any Allowance or Expense made in connection with maintaining or owing to the race horses.
  4. A deduction of fifty percent is allowed on the Interest on any kind of Compensation or enhanced compensation.
All the deductions that are acceptable in computing income are mentioned in Section Fifty-Six, Fifty-Seven, Fifty-Eight and Fifty-Nine of The Income Tax Act, 1995. Computing income after all the deductions are made is the income you finally receive.
You can use the tax calculator to calculate your tax liability easily and file ITR online accordingly at LegalRaasta.

This article has been contributed by Simmi Setia, Content Writer at LegalRaasta, an online portal for GST Software, GST Return Filing, GST Registration, Section 8 Company Registration, Nidhi Company Registration, IEC Registration, Fssai License, File ITR Online.

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