How to Report Income from Other Sources in ITR for FY 2024-25 (AY 2025-26)
- Rashmita Choudhary
- Nov 28, 2025
- 8 min read
Income from other sources often goes unnoticed, but it plays a crucial role in determining total taxable income. For FY 2024-25 (AY 2025-26), taxpayers must correctly report earnings such as interest from deposits, dividends, or winnings under the “Income from Other Sources” category as per Section 56 of the Income Tax Act, 1961. Reporting this income ensures compliance, prevents mismatches in AIS or Form 26AS, and helps claim eligible deductions. Platforms like TaxBuddy simplify this process by automatically categorising and validating such income to ensure error-free filing and accurate tax computation.
Table of Contents
Understanding Income from Other Sources
Income from other sources is a broad category under the Income Tax Act that covers earnings not classified under the main five heads of income—salary, house property, business or profession, and capital gains. Section 56 deals with such income, ensuring that every monetary receipt, even if irregular, is accounted for and taxed appropriately. This includes interest from savings accounts, dividends, gifts, winnings, and family pensions. Reporting this income correctly in your Income Tax Return (ITR) is essential to maintain transparency and avoid scrutiny from the Income Tax Department.
Types of Income Covered Under Section 56
Section 56 of the Income Tax Act covers a wide range of income types, including:
Interest earned on savings accounts, recurring deposits, and fixed deposits.
Dividend income from shares and mutual funds.
Gifts received exceeding ₹50,000 in value (subject to conditions).
Winnings from lotteries, game shows, horse races, or online gaming.
Family pension received by legal heirs after the death of an employee or pensioner.
Rental income from subletting a property (if not covered under house property). This section ensures that all forms of income—monetary or non-monetary—are taxed under the correct head when they do not fall within the other four.
How to Report Income from Other Sources in ITR
While filing the ITR, income from other sources must be reported under the specific “Income from Other Sources” schedule. Taxpayers must list each category separately, such as interest, dividends, or gifts, rather than combining them into one total. Proper reporting ensures automatic reconciliation with the data available in AIS (Annual Information Statement) and Form 26AS. Platforms like TaxBuddy simplify this by fetching prefilled data and categorizing each income type accurately, minimizing errors and ensuring compliance.
How to Report Interest Income in ITR
Interest income from savings, fixed deposits, and recurring deposits must be included under “Income from Other Sources.” Although interest from savings accounts is eligible for deduction under Section 80TTA (up to ₹10,000), the full amount must be reported first. For senior citizens, deduction up to ₹50,000 under Section 80TTB is allowed on total interest income. Always cross-check interest details from Form 26AS and AIS to avoid mismatch issues that may trigger notices from the tax department.
Reporting Dividend and Gift Income
Dividends received from companies and mutual funds are taxable in the hands of the investor. They must be reported under “Income from Other Sources.” Gifts received in cash, kind, or as immovable property exceeding ₹50,000 in value are also taxable unless received from relatives or on specific occasions such as marriage. It’s important to disclose such receipts accurately in the ITR to prevent discrepancies between reported income and financial transactions captured in AIS.
Reporting Winnings and Family Pension
Winnings from lotteries, betting, TV shows, and online games are fully taxable at a flat rate of 30% under Section 115BB. No deduction or expense can be claimed against such income. Family pension, however, is taxable under “Income from Other Sources” with a standard deduction available—either one-third of the pension amount or ₹15,000, whichever is lower. TaxBuddy automatically applies such deductions when users upload their pension or income details, ensuring accuracy.
Allowable Deductions under Section 57
Section 57 allows certain deductions from income under Section 56 to arrive at taxable income. These include:
Commission or remuneration paid for realizing dividend or interest income.
Standard deduction for family pension (one-third or ₹15,000, whichever is lower).
Other allowable expenses directly related to earning the income. No deductions are permitted for winnings or gifts, as those are taxed at fixed rates. Properly applying Section 57 deductions ensures that only net income is taxed, reducing the overall liability.
How to Report Income from Other Sources in ITR-1 vs ITR-2
ITR-1 can be used if the taxpayer’s “Income from Other Sources” is limited to interest and dividend income. However, if there are complex entries like lottery winnings, gifts, or family pension, ITR-2 must be used. TaxBuddy helps taxpayers automatically determine the correct ITR form based on income type, ensuring compliance and preventing form rejection during submission.
TDS Reporting and Claiming Credit under Schedule TDS2
Banks and financial institutions often deduct Tax Deducted at Source (TDS) on interest income, which must be reported in Schedule TDS2 of the ITR. Taxpayers should verify these entries with Form 26AS to ensure accurate credit is claimed. If any TDS is missing or mismatched, TaxBuddy’s reconciliation tool helps identify discrepancies and assists in claiming correct refunds.
Common Errors to Avoid While Reporting Other Income
Common mistakes include missing minor interest income, double-counting prefilled entries, or failing to report gift and dividend income. Another frequent issue is not reconciling income with AIS or Form 26AS, which can lead to mismatch notices. Using automated tools like TaxBuddy minimizes these risks by validating entries before submission and ensuring that each income source is accurately reported.
Consequences of Non-Reporting or Mismatches in AIS
Failure to report income accurately can result in tax notices, penalties, or reassessment under Section 143(1)(a) or Section 148. AIS tracks all financial transactions, including bank interest, dividends, and gifts. Any mismatch between your ITR and AIS data may trigger an automated alert. Hence, timely and accurate reporting using reliable filing platforms is crucial for compliance and peace of mind.
Conclusion
Accurate reporting of income from other sources helps maintain compliance and avoid unnecessary scrutiny. TaxBuddy streamlines this process by automatically detecting unreported income, applying relevant deductions, and reconciling TDS details. Whether your income includes interest, dividends, or family pension, TaxBuddy ensures error-free reporting and maximum deduction claims for a smooth filing experience.
For anyone looking for assistance in tax filing, it is highly recommended to download the TaxBuddy mobile app for a simplified, secure, and hassle-free experience.
FAQs
Q1. What qualifies as income from other sources? Any income that does not fall under the heads of salary, house property, business or profession, or capital gains is treated as “Income from Other Sources.” Common examples include interest earned on bank deposits, dividends from shares or mutual funds, gifts received from non-relatives, family pension, and winnings from lotteries or online games. This category acts as a residual head to ensure every income stream is taxed appropriately under the Income Tax Act.
Q2. How do I report bank interest income? Interest earned from savings accounts, fixed deposits, or recurring deposits must be reported under “Income from Other Sources” in the ITR. Even if TDS has been deducted by the bank, the gross amount before TDS must be disclosed. Afterward, deductions under Section 80TTA (up to ₹10,000 for savings account interest) or Section 80TTB (up to ₹50,000 for senior citizens) can be claimed to reduce taxable income.
Q3. Are gifts received from relatives taxable? Gifts received from specified relatives are exempt from tax without any monetary limit. Relatives include parents, siblings, spouse, children, and certain in-laws as defined under the Income Tax Act. However, gifts from non-relatives are taxable if their total value exceeds ₹50,000 in a financial year. Such gifts are added to “Income from Other Sources” and taxed as per the applicable slab rate under Section 56(2)(x).
Q4. How is family pension taxed? Family pension, which is received by the legal heirs of a deceased employee, is taxable under the head “Income from Other Sources.” However, Section 57 provides a standard deduction of one-third of the pension amount or ₹15,000—whichever is lower. This deduction helps reduce the overall tax burden for the recipient family members.
Q5. Is dividend income taxable? Yes, all dividend income is taxable in the hands of the investor after the abolition of Dividend Distribution Tax (DDT). Such income must be declared under “Income from Other Sources.” If the total dividend from a company or mutual fund exceeds ₹5,000 in a financial year, TDS at 10% is deducted by the payer. Taxpayers must still report the full amount of dividend income while filing their return and can claim the TDS credit accordingly.
Q6. Can I claim expenses against income from other sources? Yes, expenses directly related to earning income can be deducted under Section 57. For instance, if you pay commission or collection charges to receive interest or dividend income, such costs can be claimed as deductions. However, no expenses are allowed against winnings from lotteries, gambling, or gifts, as these are taxed at special flat rates with no relief.
Q7. Which ITR form should I use for reporting income from other sources? If you earn only interest or dividend income apart from salary or pension, you can use ITR-1 (Sahaj). However, if you have more complex incomes such as winnings, gifts, or family pension, you should use ITR-2. Using the correct form is important to ensure proper disclosure, avoid mismatches, and maintain compliance with AIS and Form 26AS records.
Q8. What happens if income reported in ITR doesn’t match with AIS? Any mismatch between the income reported in your ITR and that reflected in the Annual Information Statement (AIS) may trigger an adjustment under Section 143(1)(a) or a notice from the Income Tax Department. Common causes include missed interest income or unreported dividends. Always verify details in AIS and Form 26AS before submission to ensure accuracy and prevent unnecessary scrutiny.
Q9. Is lottery or gaming income taxed differently? Yes, winnings from lotteries, crossword puzzles, online games, TV shows, betting, or gambling are taxed at a flat rate of 30% under Section 115BB. This rate is applied without allowing any deductions for expenses, allowances, or losses. The payer also deducts TDS at 30% before payout. Taxpayers must report the full amount under “Income from Other Sources” and include the TDS credit in their return.
Q10. Do I need to pay advance tax on other income? Yes, if the total tax liability (after adjusting for TDS) exceeds ₹10,000 in a financial year, advance tax payments must be made quarterly as per prescribed due dates. Failure to pay advance tax may lead to interest under Sections 234B and 234C. Taxpayers earning substantial interest, rental, or dividend income should estimate their liability and make timely payments to avoid penalties.
Q11. How can TaxBuddy help in reporting other income? TaxBuddy simplifies the process of reporting income from other sources through automation and expert review. It auto-fetches data from AIS and Form 26AS, categorizes different income types, and calculates applicable deductions under Sections 57, 80TTA, or 80TTB. By verifying details before submission, it ensures that your filing remains accurate and free from mismatches or future notices.
Q12. What are the penalties for non-reporting income from other sources? Non-disclosure or underreporting of income from other sources can lead to serious consequences. The Income Tax Department may impose penalties under Section 270A for underreporting income—up to 50% of the tax evaded—and initiate reassessment proceedings. Intentional concealment can also attract higher penalties and prosecution in extreme cases. Filing your ITR accurately through verified platforms like TaxBuddy ensures compliance and prevents such risks.
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