Income from Other Sources in India: Complete Guide to Interest, Dividends, Gifts, and More

When people think of income tax, they usually think of salary. But a large part of tax notices and mismatches comes from a different area: Income from Other Sources. This is where interest income, dividends, gifts, lottery winnings, and certain other items are reported. If you ignore this head, you may under-report income even when TDS has already been deducted and reflected in your AIS and Form 26AS.

In this guide, I’ll walk you through what falls under “Income from Other Sources”, how it is taxed, and how to report it cleanly in your income tax return so that 26AS/AIS and your ITR are in sync.

What Is “Income from Other Sources”?

Under the Income Tax Act, income is classified into five heads:

1. Salary
2. House Property
3. Profits and Gains from Business or Profession
4. Capital Gains
5. Income from Other Sources

This last head is a residual bucket – income that doesn’t fit neatly into the other four heads is usually taxed here. Common examples include:

• Interest on savings and fixed deposits
• Interest on recurring deposits and corporate bonds (unless business income)
• Dividend income from shares and mutual funds
• Certain types of gifts (cash or property) received
• Winnings from lotteries, game shows, online fantasy platforms, and betting
• Family pension (in certain cases)
• Any other receipts not taxable under other specific heads

Interest Income: Savings, Fixed Deposits, and Others

Interest income is one of the most common “other sources”:

• Savings bank interest: Taxable, but eligible for deduction under Section 80TTA/80TTB (subject to limits)
• Fixed deposit and recurring deposit interest: Fully taxable at slab rate
• Interest from corporate bonds, debentures, etc.: Usually taxable at slab rate unless covered by special provisions

Important points:

• Interest may have TDS deducted (for example, banks deduct TDS on FD interest beyond thresholds), but even if TDS is not deducted, the interest is still fully taxable.
• Your AIS and Form 26AS will often show interest figures and TDS – your ITR should match or reasonably reconcile with these.

Dividend Income

Dividends from shares and mutual funds are now taxable in the hands of the investor at slab rates (subject to some specific rules for certain instruments and non-residents).

Key points:

• Dividend income is reported under “Income from Other Sources”.
• Companies and mutual funds may deduct TDS on dividends if amounts exceed certain thresholds – these TDS entries will appear in 26AS/AIS.
• Even if dividends are small and no TDS is deducted, they are still taxable and should be reported.

When filing ITR:

• Summarize dividend income across all demat and mutual fund platforms for the year.
• Declare the gross amount, and claim TDS credit where applicable.

Gifts: When Are They Taxable?

Gifts can be in the form of money, movable property, or immovable property. Their taxability depends on:

• Who you receive the gift from (relative vs non-relative)
• The total value and nature of the gift
• The occasion (some occasions are fully exempt)

Broadly (subject to current law):

• Gifts from specified relatives (like parents, siblings, spouse, children, certain in-laws) are generally fully exempt, regardless of amount.
• Gifts from non-relatives may be taxable if the total value of all such gifts in a year exceeds a threshold (for example ₹50,000 for certain types of gifts).
• Gifts received on specified occasions (like marriage of the individual) may be exempt.

Taxable gifts are usually reported as Income from Other Sources in your ITR. Maintaining proper documentation (gift deeds, bank entries) is important if amounts are large.

Lottery, Game Shows, and Online Winnings

Winnings from:

• Lotteries
• Game shows, reality shows
• Betting, gambling
• Many online fantasy platforms

are typically taxed at special flat rates (for example, 30% plus surcharge and cess), with no deduction for expenses or basic exemption against that income.

Usually:

• TDS is deducted at source at the special rate
• The gross winnings still need to be reported in “Income from Other Sources” under the appropriate section
• TDS credit is claimed against overall tax liability

How to Report “Income from Other Sources” in ITR

When filing:

• Use the “Income from Other Sources” schedule in your ITR form (ITR-1/2/3 as applicable).
• Clearly break up income into:
• Interest income (savings, FDs, RDs, bonds)
• Dividend income
• Taxable gifts
• Lottery and other special-rate incomes
• Any other items

Then:

• Apply appropriate deductions (for example, Section 80TTA/80TTB for savings interest) in the deductions section, not by reducing income itself.
• Cross-check totals with AIS and 26AS to ensure there are no large mismatches.

Common Mistakes to Avoid

Some frequent mistakes I see:

• Reporting only interest with TDS and ignoring interest from smaller deposits where no TDS was deducted
• Forgetting small dividend or interest entries visible in AIS
• Ignoring gift tax rules for large transfers from non-relatives
• Treating lottery or online winnings as normal income and trying to claim deductions against them

Avoiding these simple mistakes goes a long way towards clean compliance.

Using Our Calculators and Tools

Before finalizing your return:

• Use the Income Tax Calculator to factor in interest and other income correctly.
• Use your bank and broker statements along with AIS to make sure nothing significant is missed.

Final Thoughts

Income from Other Sources is not a dumping ground – it’s a well-defined head that plays a big role in how complete and accurate your return is. Taking an extra 30–45 minutes each year to gather interest statements, dividend reports, and gift documentation, and then aligning them with AIS/26AS, can save you from future notices and corrections.

Treat this head with the same seriousness as salary or business income. Once you build a simple annual routine, reporting it becomes straightforward and low-stress.

Disclaimer: Thresholds, special tax rates, and exemptions referenced in this guide are based on current law and may change through Finance Acts and notifications. Always verify latest provisions and consult a qualified tax professional for large or complex transactions, especially in the area of gifts and winnings.