Income Tax Act

Official PDF pages 161–165

SOURCE PDF PAGE 161
B = amount at which such unit was issued by the business
trust; and
C = amount charged to tax under this clause in any earlier tax
year;
( l )   where any sum, including bonus allocated, is received, during a tax year,
under a life insurance policy, other than—
( a )   sums received under a unit linked insurance policy; or
( b )   income referred to in clause ( d ),
and such sum is not to be excluded from the total income of that tax year
under Schedule II (Table: Sl. No. 2), the sum exceeding the aggregate
of the premium paid, during the term of such life insurance policy, and
not claimed as a deduction under this Act, computed in such manner,
as may be prescribed;
( m )   where any person receives in any tax year, from any person or per-
sons—
( i )   any sum of money without consideration, the total of which exceeds
`   50000, the whole of such sum;
( ii )   any immovable property—
( A )   without consideration, the stamp duty value of which
exceeds   `   50000, the stamp duty value of such property;
( B )   for a consideration, the stamp duty value of such property
that exceeds such consideration, if this excess amount is
more than the higher of the following amounts:—
( I )   `   50000; or
( II )   10% of the consideration;
( iii )   any property, other than immovable property,—
( A )   without consideration, the aggregate fair market value of
which exceeds   `   50000, 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
`   50000, the aggregate fair market value of such property as
exceeds such consideration.
(3) The provisions of sub-section (2)( m ) shall not apply to any sum of money or
any property received—
( a )   from any relative; or
( b )   on the occasion of 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; or
( e )   from any local authority as defined in Schedule III (Note 6); or

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( f )   from or by any registered non-profit organisation as defined in sec -
tion 355( g ), except when received by any person referred to in section
355( h ); or
( g )   by way of a transaction not regarded as transfer under section 70(1)( a ),
( c ), ( d ), ( e ), ( f ), ( g ), ( i ), ( j ), ( k ), ( l ), ( n ), ( o ), ( t ), ( u ), ( v ) or ( w ); or
( h )   from an individual by a trust created or established solely for the benefit
of relative of the individual; or
( i )   from such class of persons and subject to such conditions, as may be
prescribed.
(4) For the purposes of sub-section (2)( m )( ii ),—
( a )   if the date of agreement fixing the amount of consideration for the trans -
fer of immovable property and the date of registration are not the same,
the stamp duty value on the date of agreement shall apply, provided the
consideration, in whole or in part, has been paid in specified banking
or online mode as defined in section 66( 32 ) on or before the date of
agreement for transfer of such immovable property;
( b )   if the stamp duty value of immovable property is disputed by the asses -
see on the grounds mentioned in section 78(2), the Assessing Officer
may refer the valuation of such property to a Valuation Officer, and the
provisions of sections 78(2) and 288(1) (Table: Sl. No. 8) shall, as far as
may be, apply to the stamp duty value of such property as they apply for
valuation of capital asset under those sections.
(5) For the purposes of this section,—
( a )   “assessable” shall have the meaning assigned to it in section 2( 105 );
( b )   “card game and other game of any sort” includes any game show, an
entertainment programme on television or electronic mode, where people
compete to win prizes or any similar game;
( c )   “fair market value” of a property, other than an immovable property,
means the value determined by such method as may be prescribed;
( d )   “jewellery” shall have the meaning assigned to it in section 2( 22 );
( e )   “lottery” includes winnings from prizes awarded by draw of lots, by
chance, or in any other manner under any scheme or arrangement by
whatever named called;
( f )   “property” means the following capital asset of the assessee:—
( i )   immovable property being land or building or both;
( ii )   shares and securities;
( iii )   jewellery;
( iv )   archaeological collections;
( v )   drawings;
( vi )   paintings;
( vii )   sculptures;

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( viii )   any work of art;
( ix )   bullion; or
( x )   virtual digital asset;
( g )   “relative” means—
( i )   in case of an individual—
( A )   spouse;
( B )   brother or sister;
( C )   brother or sister of the spouse;
( D )   brother or sister of either of the parents;
( E )   any lineal ascendant (maternal as well as paternal) or descend -
ant;
( F )   any lineal ascendant (maternal as well as paternal) or descend -
ant of the spouse;
( G )   spouse of the person referred to in items ( B ) to ( F ); and
( ii )   for a Hindu undivided family, any member thereof;
( h )   “unit linked insurance policy” shall have the meaning assigned to it in
Schedule II (Note 1).
Deductions.
93.   (1) The income chargeable under the head “Income from other sources”
shall be computed after making the following deductions:—
10b
[ ( a )   for interest on securities, any reasonable sum paid as commission or
remuneration to a banker or any other person for the purpose of realising
such interest on behalf of the assessee; ]
( b )   for income of the nature referred to in section 92(2)( c ), so far as may be,
an amount as per section 29(1)( e );
( c )   for income of the nature referred to in section 92(2)( f ) and ( g ), so far
as may be, an amount as per section 28(1)( a ), ( b ), ( d ), section 33, and
subject to the provisions of section 28(2);
( d )   for income in the nature of family pension (a regular monthly amount
payable by the employer to a family member of an employee upon the
death of such employee),—
( i )   an amount equal to one-third of such income or   `   25000, whichever
is less, where income-tax is computed under section 202(1); and
( ii )   an amount equal to one-third of such income or   `   15000, whichever
is less, in any other case;
10b.   Substituted by the Finance Act, 2026, w.e.f.   1-4-2026 . Prior to its substitution, clause ( a )
read as under :
“( a )   for dividends [excluding those referred to in section 2( 40 )( f )] or interest on securi -
ties, any reasonable sum paid as commission or remuneration to a banker or any
other person for the purpose of realising such dividend or interest on behalf of the
assessee;”

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( e )   any other expenditure (not being in the nature of capital expenditure)
laid out or expended wholly and exclusively for making or earning such
income;
( f )   for income of the nature referred to in section 92(2)( i ), an amount equal
to 50% of such income and no other deduction shall be allowed under
this section;
( g )   for income in the nature of commutation of pension received from a
fund as specified in Schedule VII (Table: Sl. No. 3), the entire amount;
( h )   for income in the nature of gratuity as referred in section 19(2)( g ), re -
ceived on the death of the employee, the entire amount.
10c
[ (2) Irrespective of anything contained in sub-section (1), in respect of any dividend
income or income from units of a Mutual Fund specified under Schedule VII (Table:
Sl. No. 20 or 21) or income from units of a specified company as referred to in section
2( h ) of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 (58 of
2002), no deduction shall be allowed. ]
Amounts not deductible.
94.   (1) Irrespective of anything contained in section 93, the following amounts
shall not be deductible in computing the income of any assessee chargeable
under the head “Income from other sources”:—
( a )   any personal expenses of the assessee; or
( b )   any interest chargeable under this Act, payable outside India, on which
tax has not been paid or deducted under Chapter XIX-B; or
( c )   any payment chargeable under the head “Salaries”, if it is payable outside
India, unless tax has been paid or deducted under Chapter XIX-B.
(2) The provisions of sections 29, 35( b )( i ), and 36 shall apply in computing the
income chargeable under the head “Income from other sources” as they apply in
computing the income chargeable under the head “Profits and gains of business
or profession”.
(3) For an assessee, being a foreign company, the provisions of section 59 shall apply
in computing the income chargeable under the head “Income from other sources”,
as they apply in computing the income chargeable under the head “Profits and gains
of business or profession”.
10c.   Substituted by the Finance Act, 2026, w.e.f.   1-4-2026 . Prior to its substitution, sub-section
(2) read as under :
“(2) In respect of—
( a )   dividend income of the nature referred to in section 2( 40 )( f ), no deduction shall be
allowed;
( b )   any other dividend income [other than in clause ( a )], or income from units of a
Mutual Fund specified under Schedule VII (Table: Sl. No. 20 or 21) or income
from units of a specified company as referred to in section 2( h ) of the Unit Trust of
India (Transfer of Undertaking and Repeal) Act, 2002 (58 of 2002), only deduction
allowed shall be interest expense which, for any tax year, shall be limited to 20% of
such income (included in the total income for that year, without deduction under
this section).”

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(4) In computing the income from winnings from lotteries, crossword puzzles, races
including horse races, card games and other games of any sort, or from gambling
or betting of any form or nature, no deduction for any expenditure or allowance
related to such income shall be allowed under this Act.
(5) Sub-section (4) shall not apply in computing the income of an assessee, being the
owner of horses maintained for running in horse races, from the activity of owning
and maintaining such horses.
(6) For the purposes of this section, the expression “horse race” means a horse race
upon which wagering or betting may be lawfully made.
Profits chargeable to tax.
95.   The provision of section 38(1), (2), (3) and (4) shall apply in computing the
income of an assessee under section 92, as they apply in computing the income
of an assessee under the head “Profits and gains of business or profession”.
CHAPTER V
INCOME OF OTHER PERSONS INCLUDED
IN TOTAL INCOME OF ASSESSEE
Transfer of income without transfer of assets.
96.   All income arising to any person by virtue of a transfer,—
( a )   whether revocable or not, and whether effected before or after the com -
mencement of this Act; and
( b )   where there is no transfer of assets from which such income arises,
shall be chargeable to income-tax as the income of the transferor and shall be
included in his total income.
Chargeability of income in transfer of assets.
97.   (1) All income arising to any person by virtue of a revocable transfer of assets
shall be chargeable to income-tax as income of the transferor and shall be
included in his total income.
(2) The provisions of sub-section (1) shall not apply,—
( a )   where a transfer is by way of trust which is not revocable during the life -
time of the beneficiary and in case of any other transfer, is not revocable
during the lifetime of the transferee; and
( b )   the transferor does not derive any direct or indirect benefit from such
income in cases referred to in clause ( a ).
(3) Irrespective of the provisions of sub-section (2), all income arising to any per -
son by virtue of such transfer shall be chargeable to income-tax as income of the
transferor as and when the power to revoke such transfer arises, and shall then be
included in his total income.
“Transfer” and “revocable transfer” defined.
98.   For the purposes of sections 96 and 97, and this section,—