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Microlesson · 5-min read

Charging Section and Scope - Section 56

# Section 56 — Income from Other Sources: Charging Section

## When is an Income Taxable Under This Head?

An income is taxable under "Income from Other Sources" (IFOS) only if:

1. It is not taxable under any other head (Salary / House Property / PGBP / Capital Gains), AND

2. It is not exempt under the Income Tax Act, 1961.

Thus, IFOS is the residuary head of income.

## Specific Items Taxable Under IFOS [Section 56(2)]

S. No.Income
(i)Dividend income
(ii)Income from units of UTI / Mutual Funds
(iii)Interest income (not falling under PGBP)
(iv)Interest on compensation / enhanced compensation
(v)Advance money forfeited on or after 1.4.2014
(vi)Income from letting/renting of plant, machinery, furniture (if not PGBP)
(vii)Salary income of MP / MLA
(viii)Family pension
(ix)Amount received under Life Insurance Policy (other than Keyman Insurance)
(x)Money/property received without consideration or for inadequate consideration in excess of ₹ 50,000 [Section 56(2)(x)]
(xi)Casual income (lotteries, races, etc.)
(xii)Winnings from Online Games
(xiii)Undisclosed income u/s 68, 69, 69A, 69B, 69C, 69D
(xiv)Any other income not taxable under other heads and not exempt

## Important Notes

  • Salary of MP/MLA is taxable under IFOS, NOT under "Salaries" (because there is no employer-employee relationship).
  • Family pension differs from regular pension (regular pension to employee = Salary head; family pension to legal heir = IFOS).

Worked example

### Example 1

Example: Mr. Sharma earned interest of ₹ 50,000 from savings A/c, ₹ 1 lakh dividend from listed Indian shares, and ₹ 30,000 winnings from online rummy. All three are taxable under Income from Other Sources.

⚠️ Common exam mistakes

  • Treating salary income of MP/MLA under "Salaries" head.
  • Treating family pension as Salary income (it is IFOS).
  • Missing that interest on tax refund is taxable under IFOS in the year of receipt.
Bare-Act text Section 56 · Income Tax Act, 1961 · click to expand
Section 56(1): Income of every kind which is not to be excluded from the total income under this Act shall be chargeable to income-tax under the head 'Income from other sources', if it is not chargeable to income-tax under any of the heads specified in section 14, items A to E.
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