ISA 2

Income from Other Sources is covered under which Section of the Income Tax Act, 1961?

• Section 45

• Section 24

• Section 56

• Section 80C

Answer explanation

Income from Other Sources is specifically covered under Section 56 of the Income Tax Act, 1961, which outlines the provisions for various types of income not categorized under other sections.

Which of the following is NOT taxable under 'Income from Other Sources'?

• Interest on debentures

• Winnings from lotteries

• Salary from employer

• Family pension

Answer explanation

Salary from employer is classified as 'Income from Salary', not 'Income from Other Sources'. The other options, like interest on debentures and winnings from lotteries, are taxable under 'Income from Other Sources'.

Winnings from lotteries are taxable at a flat rate of:

• 10%

• 20%

• 30%

• 40%

Answer explanation

Winnings from lotteries are subject to a flat tax rate of 30%. This means that regardless of the amount won, 30% of the winnings will be deducted as tax.

Gift received from a friend worth ₹60,000 is:

• Fully exempt

• Fully taxable

• Partially exempt

• Taxable only if in cash

Answer explanation

Gift received from a friend is fully exempt from tax under Indian tax laws, regardless of its value, as long as it is not received in cash exceeding ₹50,000.

Gifts are taxable if the aggregate value in a year exceeds:

• ₹10,000

• ₹25,000

• ₹50,000

• ₹1,00,000

Answer explanation

Gifts are taxable if their total value exceeds ₹25,000 in a financial year. Therefore, the correct answer is ₹25,000, as amounts below this threshold are not subject to tax.

Income of a minor child is clubbed with:

• Either parent

• Parent with higher income

• Mother only

• Father only

Answer explanation

The income of a minor child is clubbed with the parent who has the higher income. This rule ensures that the tax liability is calculated based on the higher earning parent's income, making 'Parent with higher income' the correct choice.

Exemption allowed for minor child's income is:

• ₹1,000 per child

• ₹1,500 per child

• ₹2,000 per child

• No exemption

Answer explanation

The exemption allowed for a minor child's income is ₹2,000 per child, which helps reduce the tax burden on families with children. This amount is specified in the tax regulations.

Family pension deduction allowed is:

• 1/4th of pension or ₹12,000 whichever is lower

• 1/3rd of pension or ₹15,000 whichever is lower

• 50% of pension

• Fully exempt

Answer explanation

The family pension deduction is limited to 1/3rd of the pension or ₹15,000, whichever is lower. This means that if the pension exceeds ₹45,000, the deduction will be capped at ₹15,000.

TDS on bank FD interest is deducted if annual interest exceeds:

• ₹10,000

• ₹20,000

• ₹40,000 (₹50,000 for senior citizens)

• ₹1,00,000

Answer explanation

TDS on bank FD interest is deducted if the annual interest exceeds ₹40,000 for general taxpayers and ₹50,000 for senior citizens, making ₹40,000 (₹50,000 for senior citizens) the correct choice.

Commission received by insurance agents is taxable under:

• Salary income

• Business income

• Income from Other Sources

• Exempt income

Answer explanation

Commission received by insurance agents is considered 'Income from Other Sources' as it does not fall under salary or business income, making this the correct classification for tax purposes.