Income from Other Sources —
Interest, Dividends & Gifts
The residual head of income under Section 56 — how FD and savings interest, dividends, lottery and gaming winnings, gifts and family pension are taxed, at what rate, and the deductions you can still claim.
Income from Other Sources (IOS) is the residual head under Section 56 — everything not taxed as salary, house property, capital gains or business. Most of it is taxed at your normal slab rate: bank/FD and savings interest, dividends, family pension and gifts. But lottery, betting, game-show and online-gaming winnings are taxed at a flat 30% (Section 115BB / 115BBJ) with no slab benefit, and gifts from non-relatives are taxable once they exceed Rs 50,000 in a year.
The IOS income itself is taxed at the same slab rates whether you are on the default new regime or the old one. What changes is the deductions: 80TTA (savings interest) and 80TTB (senior-citizen deposit interest) are allowed only under the old regime. The family-pension standard deduction is available in both.
What Falls Under Income from Other Sources
Every common IOS item, how it is taxed and the TDS the payer deducts. Interest and dividends flow into your income-tax slabs; winnings are ring-fenced at a flat 30%.
| Income type | Tax treatment | TDS |
|---|---|---|
| Bank FD / recurring-deposit interest | Slab rate | 10% if interest > Rs 50,000/yr (Rs 1,00,000 for seniors) u/s 194A |
| Savings-account interest | Slab rate | No TDS · 80TTA/80TTB deduction may apply |
| Post-office interest (MIS, TD, NSC) | Slab rate | 10% u/s 194A (above threshold) |
| Dividends (shares / mutual funds) | Slab rate | 10% if dividend > Rs 10,000/yr u/s 194 |
| Lottery / game-show / betting winnings | Flat 30% | 30% u/s 194B (above Rs 10,000) |
| Horse-race winnings | Flat 30% | 30% u/s 194BB |
| Online-gaming winnings | Flat 30% | 30% on net winnings u/s 194BA |
| Gift from non-relative > Rs 50,000 | Slab rate | No TDS · whole amount taxable |
| Gift on marriage / by will / inheritance | Exempt | No TDS |
| Family pension | Slab rate* | No TDS · *after standard deduction |
| Interest on income-tax refund | Slab rate | No TDS |
Winnings are taxed on the gross amount — no deduction, expense or basic-exemption set-off is allowed against them.
How Interest Income Is Taxed
Interest from bank FDs, recurring deposits, savings accounts, post-office schemes, bonds and NSC is added to your total income and taxed at your slab rate — the bank's 10% TDS is not the final tax. If your total income is below the taxable limit, submit Form 15G / 15H so no TDS is deducted.
- FD / RD interest — taxable each year on accrual; TDS u/s 194A at 10% once interest crosses Rs 50,000 a year (Rs 1,00,000 for senior citizens, raised in Budget 2025).
- Savings interest — no TDS, but fully taxable; a deduction is available under 80TTA / 80TTB (old regime).
- NSC interest — taxed yearly on accrual; the reinvested interest also qualifies as a Section 80C investment (except the final year).
Banks deduct 10% TDS, but if you are in the 20% or 30% slab you must pay the balance as self-assessment or advance tax. Conversely, if your income is below the exemption limit, the 10% TDS can be reclaimed as a refund by filing your ITR — or avoided upfront with Form 15G/15H.
Lots of FD, dividend and gaming TDS to reconcile? Let us file it right.
Get ITR Filing Help →Dividend Income Tax
Since FY 2020-21 the Dividend Distribution Tax (DDT) has been abolished and dividends are taxable in the investor's hands at slab rate. The company or mutual fund deducts 10% TDS under Section 194 once dividends paid to you cross Rs 10,000 a year (raised from Rs 5,000 in Budget 2025). Interest paid on money borrowed to buy the shares is deductible against the dividend, capped at 20% of the dividend income.
When Are Gifts Taxable?
If the total value of gifts (money or property) received from non-relatives in a financial year exceeds Rs 50,000, the whole amount — not just the excess — is taxable as IOS at your slab rate. Below Rs 50,000 it is fully exempt.
Gift is exempt if
- Received from a relative (parents, siblings, spouse, children, grandparents, in-laws)
- Received on the occasion of your marriage
- Received under a will or by inheritance
- From a local authority, registered trust or fund u/s 10(23C)
Gift is taxable if
- From a friend / non-relative and total > Rs 50,000 in the year
- Immovable property received for no / inadequate consideration
- Shares or jewellery from a non-relative above the threshold
- Cash gift above Rs 50,000 outside the exempt occasions
Lottery, card-game, betting, game-show and online-gaming winnings are taxed at a flat 30% under Section 115BB / 115BBJ. You cannot claim the basic exemption limit, any deduction or expense against them, and losses cannot be set off. The payer already deducts 30% TDS, so a big win rarely leaves further tax — but it must still be reported in the ITR.
Deductions Under Income from Other Sources
| Section | Deduction | Limit | Regime |
|---|---|---|---|
| 80TTA | Savings-account interest (bank, post office, co-op) | Rs 10,000 | Old only |
| 80TTB | Deposit interest (FD + savings) for seniors 60+ | Rs 50,000 | Old only |
| 57(iia) | Standard deduction on family pension | Rs 25,000 / 33.33% | Both |
| 57(i) | Interest on loan taken to earn dividend | 20% of dividend | Both |
Budget 2025 raised the family-pension standard deduction to the lower of Rs 25,000 or one-third of the pension (from Rs 15,000) — confirm the figure for your ITR year on the portal.
How to Report IOS in Your ITR
- Bank & post-office interest certificates
- Dividend statements from broker / RTA
- AIS and Form 26AS downloaded
- TDS on winnings (Form 16A)
- Record of gifts received
- Family-pension payment details
- 80TTA / 80TTB eligibility checked
- Old vs new regime compared before filing
The Annual Information Statement now pre-fills most interest, dividend and TDS data. Any interest you leave out of Schedule OS but that appears in your AIS is a common trigger for a mismatch notice. Reconcile before you file.
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Get ITR Filing Help →Income from Other Sources — Frequently Asked Questions
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