Costing and Taxation · Ch 3 — Income from Other Sources
Basis of Charge under Income from Other Sources
Basis of Charge under Income from Other Sources
Income from Other Sources, the fifth and last of the five Heads of Income under Section 14, is deliberately a residuary head — a safety net that catches every item of income a person earns that does not fall under any of the first four heads (Salaries, Income from House Property, Profits and Gains of Business or Profession, Capital Gains), provided that item is not otherwise exempt under Section 10.
Assessment Year grounding (read this first)
This chapter is grounded on the Income Tax Act, 1961 as applicable for Assessment Year 2026-27 (income of Financial Year 2025-26) — the same Act and Assessment Year as this course's other Taxation-strand chapters. AY 2026-27 continues to be governed entirely by the 1961 Act; the newly enacted Income-tax Act, 2025 applies only from Tax Year 2026-27 onward, i.e., Assessment Year 2027-28 (see Income from Capital Gains for the full transition note). Section numbers cited here — 56, 56(2)(ib), 56(2)(id), 57 — are stable; only numeric rates/limits should be re-checked against the year an actual problem relates to.
Basis of Charge — Section 56
Section 56(1) lays down the basic, residuary charge: income of every kind, if it is not exempt from tax and does not fall under Salaries, House Property, Business/Profession, or Capital Gains, is chargeable under 'Income from Other Sources'. Section 56(2) then goes further and specifically NAMES several kinds of income that are always charged under this head — the two this chapter studies in depth, Winnings [Section 56(2)(ib)] and Interest on Securities [Section 56(2)(id)], are covered in Sections 3.3 and 3.4 below.
Two conditions must both hold before an item of income is charged under this residuary Head:
- It must genuinely BE income in the first place (not, say, a mere capital receipt or a gift specifically exempted); and
- It must NOT be chargeable under any of the other four heads.
WBCHSE's Costing and Taxation syllabus treats Income from Other Sources by exactly the same Section 56 residuary-charge logic that CBSE/NCERT Accountancy and Economics courses reference wherever they discuss the five Heads of Income — the underlying Income Tax Act framework is identical across every board.
The residuary Head of Income — income of every kind that is not exempt and does not fall under Salaries, House Property, Business/Profession, or Capital Gains.