Income from Other Sources: Gifts, Interest, Dividends and Winnings (Income-tax Act, 2025)

"Income from other sources" is the residual head of income in the Income-tax Act, 2025. Under section 92(1), any income that is not exempt and does not fall under salaries, house property, business or profession, or capital gains is taxed here. It covers dividends, winnings from lotteries and games, interest on securities, family pension, and gifts received without consideration above Rs 50,000 in a tax year.

This guide goes through what section 92 lists, which gifts are taxable and which are not, the deductions in section 93, and what section 94 refuses. Every figure comes from the Act as amended by the Finance Act, 2026 (tax year 2026-27) and the Income-tax Rules, 2026. This is information, not tax advice.

What is taxed under "Income from other sources"?

Section 92(1) is the catch-all. Section 92(2) then lists items that are always taxed here, "without prejudice to the generality" of the catch-all. Some of them apply only when the income is not already chargeable under business or profession (or salaries, for some items).

Section 92(2)	Income	Condition
(a)	Any dividend	None
(b)	Winnings from lotteries, crossword puzzles, races including horse races, card games and other games, gambling or betting	None
(c)	Employees' contributions to provident, superannuation, ESI or other welfare funds, received by the assessee	Not taxed under business or profession
(d)	Sum received under a Keyman insurance policy, with bonus	Not taxed under business or profession or salaries
(e)	Interest on securities	Not taxed under business or profession
(f), (g)	Letting of machinery, plant or furniture (and buildings where inseparable from them)	Not taxed under business or profession
(h)	Advance forfeited during negotiations for transfer of a capital asset	Negotiations did not result in a transfer
(i)	Interest on compensation or enhanced compensation under section 278(1)	None
(j)	Compensation on termination of employment or modification of its terms	None
(k)	Specified sum received by a unit holder from a business trust	Computed as A - B - C, never below zero
(l)	Sum under a life insurance policy (other than a unit linked policy) above the premiums paid and not claimed as deduction	Not excluded under Schedule II, Sl. No. 2
(m)	Money or property received without consideration or for inadequate consideration	Above the limits below; exceptions in section 92(3)

When is a gift taxable under section 92(2)(m)?

A gift is taxed in the hands of the person who receives it. The test applies to the total received in a tax year "from any person or persons", so several small gifts from different people are added together.

What you receive	When it is taxable	Amount taxed
Money, no consideration (clause (i))	Total in the tax year exceeds Rs 50,000	The whole sum
Immovable property, no consideration (clause (ii)(A))	Stamp duty value exceeds Rs 50,000	The stamp duty value
Immovable property, for a consideration (clause (ii)(B))	Stamp duty value minus consideration is more than the higher of Rs 50,000 or 10% of the consideration	The excess of stamp duty value over consideration
Other property, no consideration (clause (iii)(A))	Aggregate fair market value exceeds Rs 50,000	The whole fair market value
Other property, for a consideration (clause (iii)(B))	Fair market value exceeds consideration by more than Rs 50,000	The excess of fair market value over consideration

"Property" is defined in section 92(5)(f): land or building, shares and securities, jewellery, archaeological collections, drawings, paintings, sculptures, any work of art, bullion and virtual digital assets. Fair market value of property other than immovable property is determined as prescribed (rules 56 and 57). For these rules the valuation date is the date the property is received (rule 56, Table Sl. No. 1).

Which gifts are not taxed?

Section 92(3) says clause (2)(m) does not apply to money or property received:

• from any relative (defined in section 92(5)(g));
• on the occasion of marriage of the individual;
• under a will or by inheritance;
• in contemplation of the death of the payer or donor;
• from a local authority;
• from or by a registered non-profit organisation, except when received by a person referred to in section 355(h);
• by way of a transaction not regarded as a transfer under the listed clauses of section 70(1);
• by a trust created solely for the benefit of a relative of the individual, from that individual;
• from such class of persons and subject to such conditions as are prescribed (rule 58 lists them, for example certain shares received under strategic disinvestment).

For an individual, "relative" means the spouse; brother or sister; brother or sister of the spouse; brother or sister of either parent; any lineal ascendant or descendant; any lineal ascendant or descendant of the spouse; and the spouse of any of those persons (other than the spouse). For an HUF, any member is a relative. Friends, cousins and in-laws outside this list are not relatives. See also transactions not regarded as transfer, which covers the capital gains side of gifts.

How is the stamp duty value fixed for property bought with a gap between agreement and registration?

Under section 92(4)(a), if the agreement fixing the price and the registration are on different dates, the stamp duty value on the date of agreement applies, provided the consideration, wholly or partly, was paid in a specified banking or online mode on or before that date. If you dispute the stamp duty value, the Assessing Officer may refer it to a Valuation Officer (section 92(4)(b)).

How is bank interest on savings accounts and fixed deposits taxed?

Interest on a savings account, fixed deposit or post office deposit is not one of the items named in section 92(2) ("interest on securities" is a separate defined term in section 2(60)). It is income that fits no other head, so it is taxed under the residual rule in section 92(1) at your slab rates. Two rules then matter: a deduction in section 153 and TDS in section 393(1).

Who	Deduction under section 153(2)
Individual (not a senior citizen) or HUF	Interest on savings account deposits, up to Rs 10,000 (time deposits excluded) - clause (a)
Senior citizen	Interest on deposits in any account, including time deposits, up to Rs 50,000 - clause (b)

The deposit must be with a banking company, a co-operative bank or a post office (section 153(1)). Interest on deposits held by a firm, AOP or body of individuals gives no such deduction to the partners or members (section 153(3), (4)). "Time deposits" are deposits repayable on expiry of fixed periods (section 153(5)).

TDS on interest. Under section 393(1), Table Sl. No. 5(ii), a bank, co-operative bank or post office deducts tax at rates in force once interest exceeds Rs 1,00,000 in a year for a senior citizen, or Rs 50,000 for others. Other payers of interest (other than on securities) deduct under Sl. No. 5(iii) above Rs 10,000. Interest on securities has its own threshold of Rs 10,000 (Sl. No. 5(i)). Crossing or staying under a TDS threshold does not change whether the interest is taxable; it only decides whether tax is cut at source.

What deductions are allowed under section 93?

Income	Deduction (section 93(1))
Interest on securities	Reasonable commission or remuneration paid to a banker or other person for realising the interest (clause (a), substituted from 1 April 2026; it no longer mentions dividends)
Employees' contributions to welfare funds (92(2)(c))	As per section 29(1)(e) (clause (b))
Hire of machinery, plant, furniture, with buildings (92(2)(f), (g))	Amounts as per section 28(1)(a), (b), (d) and section 33, subject to section 28(2) (clause (c))
Family pension	One-third of the income or Rs 25,000, whichever is less, where tax is computed under the new regime in section 202(1); otherwise one-third or Rs 15,000, whichever is less (clause (d))
Any of the above or other income	Any other revenue expenditure laid out wholly and exclusively to earn that income (clause (e))
Interest on compensation (92(2)(i))	50% of the income, and no other deduction (clause (f))
Commutation of pension from a Schedule VII, Sl. No. 3 fund	The entire amount (clause (g))
Gratuity received on death of the employee (section 19(2)(g))	The entire amount (clause (h))

"Family pension" means a regular monthly amount paid by the employer to a family member after the employee's death. Dividends and income from specified mutual fund or UTI units get no deduction at all under section 93(2), as substituted from 1 April 2026. The earlier cap of interest expense at 20% of such income no longer appears in the section.

What expenses are never deductible?

Section 94 overrides section 93 for these items:

• personal expenses of the assessee (94(1)(a));
• interest payable outside India on which tax was not paid or deducted under Chapter XIX-B (94(1)(b));
• salary payable outside India, unless tax was paid or deducted (94(1)(c)).

Sections 29, 35(b)(i) and 36 apply to this head as they apply to business income (94(2)). For a foreign company, section 59 applies too (94(3)). Section 95 applies section 38(1) to (4) in computing the income under section 92, as for business income.

Winnings get no deduction. Under section 94(4), no expenditure or allowance connected with winnings from lotteries, games, gambling or betting is allowed. The only exception (94(5)) is an owner of racehorses, for the activity of owning and maintaining them. "Horse race" here means a race on which betting may be lawfully made (94(6)).

What is the tax rate on winnings?

Section 194, Table Sl. No. 1, taxes winnings from lottery, crossword puzzles, races including horse races (not income from owning and maintaining race horses), card games and other games, and gambling or betting (other than online games) at 30%. For winnings, section 92(5) widens "card game and other game of any sort" to include game shows and TV or electronic entertainment programmes where people compete for prizes, and "lottery" includes prizes by draw of lots, chance or any other scheme.

On the payer's side, section 393(3), Table Sl. No. 1 requires tax deduction at rates in force on winnings above Rs 10,000 in a single transaction, and Sl. No. 3 applies to horse race winnings (threshold Rs 10,000) where the payer is a bookmaker or a person licensed for horse racing or race course betting. Where winnings are wholly or partly in kind, the payer must ensure the tax is paid before releasing the winnings (Note 2).

How is life insurance maturity taxed under section 92(2)(l)?

If a sum (including bonus) is received under a life insurance policy that is not a unit linked policy and not excluded under Schedule II, Sl. No. 2, the taxable amount is the sum received minus premiums paid that were not claimed as deduction. Rule 59 gives the formula. In the first tax year of receipt it is A - B, where A is the sum received in that year and B is the premium paid till the date of receipt. In a later tax year it is C - D, where D excludes premiums already counted in B or in an earlier D.

Worked examples (tax year 2026-27)

Example 1: several small gifts from friends

Assumptions: Ravi is an individual. He receives gifts of money with no consideration, none from a relative, none on his marriage.

Step	Working	Result
Gift from friend 1	Rs 30,000	Rs 30,000
Gift from friend 2	Rs 35,000	Rs 65,000 in total
Test, section 92(2)(m)(i)	Rs 65,000 exceeds Rs 50,000	Taxable
Amount taxed	The whole sum, not just the excess	Rs 65,000

Had the total been Rs 50,000 exactly, nothing would be taxed, because the clause applies only when the total "exceeds" Rs 50,000.

Example 2: flat bought below stamp duty value

Assumptions: Meena buys a flat. The stamp duty value is Rs 60,00,000 and the registered price is Rs 56,00,000 (case A) or Rs 50,00,000 (case B).

Step	Case A	Case B
Stamp duty value	Rs 60,00,000	Rs 60,00,000
Consideration	Rs 56,00,000	Rs 50,00,000
Excess	Rs 4,00,000	Rs 10,00,000
10% of consideration	Rs 5,60,000	Rs 5,00,000
Higher of Rs 50,000 and 10%	Rs 5,60,000	Rs 5,00,000
Excess above the higher amount?	No (4,00,000 is not more than 5,60,000)	Yes (10,00,000 is more than 5,00,000)
Taxed under section 92(2)(m)(ii)(B)	Nil	Rs 10,00,000

Example 3: lottery win

Assumptions: Kavita wins Rs 2,00,000 in a lottery and had spent Rs 5,000 on tickets. Surcharge and cess are ignored.

1. Winnings taxable under section 92(2)(b): Rs 2,00,000.
2. Ticket cost: no deduction (section 94(4)). Taxable stays Rs 2,00,000.
3. Rate under section 194, Table Sl. No. 1: 30%.
4. Tax: 2,00,000 x 30% = Rs 60,000.
5. The payer deducts tax at source because the win exceeds Rs 10,000 (section 393(3), Sl. No. 1); Kavita gets credit for it.

Example 4: family pension

Assumptions: Savitri receives family pension of Rs 30,000 a month for all 12 months of the tax year, and is taxed under the new regime in section 202(1).

1. Annual family pension: 30,000 x 12 = Rs 3,60,000.
2. One-third of income: 3,60,000 / 3 = Rs 1,20,000.
3. Cap under section 93(1)(d)(i): Rs 25,000.
4. Deduction: the lower of the two = Rs 25,000.
5. Taxable under other sources: 3,60,000 - 25,000 = Rs 3,35,000.

Example 5: policy maturity

Assumptions: Anil receives Rs 8,00,000 on maturity of a non-unit-linked policy, not excluded under Schedule II, Sl. No. 2. He paid Rs 5,00,000 of premiums over the term and claimed none as a deduction.

Taxable under rule 59(1)(i): A - B = 8,00,000 - 5,00,000 = Rs 3,00,000.

Real-life scenarios

• Ravi's wedding. Ravi's friends and cousins give him cash totalling Rs 4,00,000 at his wedding. Section 92(3)(b) excludes gifts on the occasion of marriage of the individual, so none of it is taxed under section 92(2)(m).
• Meena and her uncle. Meena's mother's brother gives her Rs 10,00,000 to buy a flat. He is a brother of a parent, so he is a relative under section 92(5)(g)(i)(D). The gift is outside section 92(2)(m).
• Suresh and a friend's loan-turned-gift. A friend transfers Rs 1,20,000 to Suresh with no repayment terms. A friend is not a relative, so the whole Rs 1,20,000 is taxable in Suresh's hands.

Which ITR form applies?

Under rule 164(2)(c), a resident individual (not RNOR) with income under other sources can use ITR-1 (Form SAHAJ) except where the income includes winnings from lottery or income from race horses, or there is a loss under the head. Rule 164(3)(e) also bars ITR-1 for anyone who claims a section 93 deduction other than the family pension deduction in clause (d). So if you claim expenses against income from other sources, ITR-1 is not available.

Common mistakes

• Testing each gift separately against Rs 50,000. The test is on the total received in the tax year.
• Treating a friend, cousin or colleague as a "relative". Only the list in section 92(5)(g) counts.
• Taxing only the excess over Rs 50,000. For money gifts the whole sum is taxed once the total exceeds the limit.
• Deducting ticket cost, travel or interest against winnings. Section 94(4) disallows all of it.
• Claiming an interest deduction against dividends. Section 93(2) allows none.
• Ignoring the stamp duty value on a property purchase that closes below it. Check the 10% / Rs 50,000 test.

Quick reference

Item	Figure	Section
Gift of money or property, threshold	Rs 50,000	92(2)(m)
Purchase below stamp duty value	Higher of Rs 50,000 or 10% of consideration	92(2)(m)(ii)(B)
Family pension deduction	1/3 or Rs 25,000 (new regime); 1/3 or Rs 15,000 (other)	93(1)(d)
Interest on compensation deduction	50%	93(1)(f)
Tax on winnings	30%	194, Sl. No. 1
TDS threshold on winnings	Rs 10,000 single transaction (winnings and horse races)	393(3), Sl. No. 1 and 3

Where this is in the Act

• Section 92: charge, list of incomes, taxable gifts, exceptions, definitions.
• Section 93: deductions. Section 94: amounts not deductible. Section 95: applies section 38 to this head.
• Section 194, Table Sl. No. 1: 30% rate on winnings. Section 393(3), Table Sl. No. 1 to 3 and Notes 1 and 2: TDS on winnings.
• Rules 56 and 57: fair market value. Rule 58: prescribed classes exempt from section 92(2)(m). Rule 59: life insurance computation. Rule 164: ITR forms.

For a CA firm, gifts, high-value property purchases and winnings tend to surface late, during return preparation. Finexo's practice management software helps you keep client documents and queries in one place so these items are asked for early. It does not compute tax or file returns for you. For the TDS side of a similar income type, see our guide on TDS on rent under the Income-tax Act, 2025.