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On what conditions deductions will be allowed from Income from other sources?

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On what conditions deductions will be allowed from Income from other sources?
posted Jul 17, 2017 by Aayushi Bansal

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Deductions from income from other sources

The income chargeable to tax under this head is computed after making the following deductions :

  1. In case of Dividends and interest on Securities : In the case of dividends or interest on securities, any reasonable sum paid by way of commission or remuneration to a banker or any other person for the purpose of realizing such dividend 3[or interest] on behalf of the assessee;

  2. In case of Income from letting of machinery , plant or furniture with or without building : The following deductions shall be allowed from the income earned by letting of machinery , plant or furniture with or without building.

    • Expenditure incurred on current repairs of plant, machinery, furniture or building.
    • Insurance paid regarding these assets.
    • Depreciation of plant, machinery and furniture . Depreciation in respect of Building will be allowed only if the assessee is the owner. It will not be allowed if the assessee is lessee or mortgagee in possession of the building.
  3. Deduction of amount deposited : Any amount received by employer from his employee as their contribution to provident fund, E.S.i. Fund or superannuation fund is deemed as income u/s 59(ic) if not taxable under the head “Profit and Gains of Business or Professions.

  4. Standard Deduction in the case of family pension [ Sec.57(iia)] : In the case of income in the nature of family pension, the amount deductible is Rs. 15,000 or 33 ½% of such income, whichever is less.

  5. Any other expenses fro earning income [ Sec. 57(iii)] : if the following 4 basic conditions are satisfied :
    i. The expenditure should be incurred solely for earning such income
    ii. It should not be in the nature of capital expenditure
    iii. Is should not be in the nature of personal expense.
    iv. Is should be incurred in the relevant accounting year.

  6. With effect from the Assessment Year 2010-11, in case of interest on Compensation or Enhanced Compensation, 50% of such interest.

answer Jul 18, 2017 by Babita Thawani
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