Section 92 of the Income-tax Act, 2025 charges income not falling under any other head to Income from other sources, and specifically covers dividends, winnings, employee contributions not taxed as business income, Keyman insurance, interest on securities, hire of plant and machinery, and forfeited advances.
What section 92 does
Section 92 is the residuary head — the successor to section 56 of the Income-tax Act, 1961. Income of every kind that is not excluded from total income and not chargeable under any of the heads in section 13(a) to (d) falls here.
Sub-section (2) then lists specific inclusions without prejudice to the generality of sub-section (1). Several of them apply only if the income is not chargeable under the business head — dividends, interest on securities, hire of machinery, and employee contributions all carry that qualification.
Two items catch taxpayers off guard. Clause (h) taxes a forfeited advance received during negotiations for transfer of a capital asset where the negotiations fail. And clause (j) taxes compensation on termination or modification of employment received by a person for whom it is not salary.
The Income-tax Act, 2025 takes effect from 1 April 2026 and applies from tax year 2026-27. The Income-tax Act, 1961 continues to govern every year up to 31 March 2026, including assessments, appeals and penalties for those years, because of the repeal and savings provision in section 536. Figures quoted here are the amounts written into the Act as enacted (with the Gazette corrigenda of 3 September 2025); the annual Finance Act can change rates and thresholds.
Old Act and new Act, side by side
The table below shows what the Income-tax Act, 1961 did and where the same ground is covered in the Income-tax Act, 2025.
| Income-tax Act, 1961 | What it did | Income-tax Act, 2025 |
|---|---|---|
| 56(1) | Residuary charge | 92(1) |
| 56(2)(i) | Dividends | 92(2)(a) |
| 56(2)(ib) | Winnings from lotteries and games | 92(2)(b) |
| 56(2)(ic) | Employee contributions to funds | 92(2)(c) |
| 56(2)(iv) | Keyman insurance policy | 92(2)(d) |
| 56(2)(ii) and (iii) | Hire of machinery, plant, furniture and buildings | 92(2)(f) and (g) |
| 56(2)(ix) | Forfeited advance on a capital asset | 92(2)(h) |
| 56(2)(viii) | Interest on compensation | 92(2)(i) |
| 56(2)(xi) | Compensation on termination of employment | 92(2)(j) |
Section 92 sub-section by sub-section
Read this alongside the bare text — each heading below is a sub-section of the section as enacted.
Sub-section (1) — the residuary rule
Income of every kind which is not to be excluded from total income under the Act is chargeable under the head Income from other sources if it is not chargeable under any of the heads specified in section 13(a) to (d) — that is, salaries, house property, business or profession, and capital gains. It is the head of last resort, not a head of choice.
Clauses (a) to (e) — dividends, winnings, fund contributions and securities
Any dividend; winnings from lotteries, crossword puzzles, races including horse races, card games and other games, or gambling or betting; sums received from employees as contributions to a provident, superannuation, ESI or welfare fund where not taxed as business income; sums under a Keyman insurance policy where not taxed as business income or salary; and interest on securities where not business income.
Clauses (f) and (g) — letting of plant and buildings
Income from machinery, plant or furniture let on hire, and income from letting machinery, plant or furniture together with buildings where the letting of the buildings is inseparable from it — in both cases only where not chargeable as business income. This is the provision that keeps composite lettings out of the house property head.
Clause (h) — the forfeited advance
Any sum of money received as an advance or otherwise during negotiations for the transfer of a capital asset, where (i) the sum is forfeited and (ii) the negotiations do not result in transfer. The receipt is taxed in the year of forfeiture as other sources income — and correspondingly is not reduced from the cost of the asset when it is later sold.
Clauses (i) to (l) — interest on compensation, employment termination and business trusts
Interest on compensation or enhanced compensation under section 278(1); compensation or other payment on termination of employment or modification of its terms; the specified sum received by a unit holder from a business trust, computed by the formula A − B − C, deemed zero where B plus C exceeds A; and sums including bonus received under a life insurance policy other than specified unit linked policies.
How the deductions work
The deductions against this head are in section 93 — including the family pension deduction and a flat 50% for interest on compensation. Amounts not deductible are in section 94, and profits chargeable to tax are in section 95.
Worked example
An individual receives the following in tax year 2026-27, none of it business income.
| Receipt | Amount | Head and clause |
|---|---|---|
| Dividend from listed shares | ₹1,40,000 | Other sources — clause (2)(a) |
| Lottery winnings | ₹50,000 | Other sources — clause (2)(b); taxed at 30% under section 194 |
| Advance of ₹6,00,000 for sale of a plot, forfeited when the buyer withdrew | ₹6,00,000 | Other sources — clause (2)(h) |
| Rent from machinery let on hire to a factory | ₹3,20,000 | Other sources — clause (2)(f) |
| Interest on enhanced land acquisition compensation | ₹4,00,000 | Other sources — clause (2)(i); 50% deductible under section 93(1)(f) |
| Family pension | ₹2,40,000 | Other sources; deduction under section 93(1)(d) |
The forfeited advance is the item most often mishandled. It is taxed in full as other sources income in the year of forfeiture — it does not reduce the cost of the plot when it is eventually sold, and it is not a capital receipt.
Note also that the ₹4,00,000 of interest on compensation attracts a flat 50% deduction under section 93(1)(f), and no other deduction is allowed against it.
Compliance checklist and due dates
- Check the four specified heads in section 13(a) to (d) before concluding an income belongs here.
- For dividends, interest on securities, fund contributions and hire income, confirm the item is not chargeable as business income — several clauses are conditional on that.
- Offer a forfeited advance in the year of forfeiture, and do not reduce it from the asset's cost later.
- Apply the deductions in section 93, including the family pension deduction and the 50% for interest on compensation.
- For composite lettings of plant with buildings, test whether the letting is inseparable — that decides between this head and house property.
- Winnings under clause (2)(b) are taxed at the special rate in section 194, with no deduction for expenditure.
Common mistakes
- Treating a forfeited advance as a capital receipt or netting it against the asset's cost.
- Taxing dividends or hire income here when they are in fact business income of the assessee.
- Claiming ordinary expenses against lottery winnings; section 194 bars deductions.
- Putting composite plant-and-building rent under house property when the letting is inseparable.
- Confusing section 92 of the new Act with section 92 of the 1961 Act, which was transfer pricing — that is now section 161.
This is an explanatory guide, not tax advice, and it does not reproduce the section in full. Read the bare text of the section before you rely on it, and check for later amendments, the Income-tax Rules made under the new Act, and CBDT circulars and notifications.