Section 92 is the substantive equivalent of 1961 s. 56 — the residual / catch-all charging provision and one of the most-litigated chargeing sections of the Act. Architecture spans 5 sub-sections covering: (i) Sub-s. (1) — RESIDUAL…
92
ITA 2025 · Section 92
Section 92 — INCOME FROM OTHER SOURCES (RESIDUAL CHARGING SECTION — EXPANDED)
Section 92 is the substantive equivalent of 1961 s. 56 — the residual / catch-all charging provision and one of the most-litigated chargeing sections of the Act. Architecture spans 5 sub-sections covering: (i) Sub-s. (1) — RESIDUAL CHARGE: any income not chargeable under HP / Salaries / PGBP / Capital Gains and not exempt; (ii) Sub-s. (2) — 13 SPECIFIC ENUMERATED items: dividend [a], winnings [b], employee-fund-contributions [c], Keyman insurance [d], securities-interest [e], machinery-hire [f], composite-letting [g], forfeited earnest money [h], interest-on-enhanced-compensation [i], employment-termination compensation [j], business-trust unit specified-sum [k] (with A-B-C formula), life-insurance excess [l], GIFTS / underpriced-receipts [m] (the 'gift regime' — three sub-categories at ₹ 50,000 threshold); (iii) Sub-s. (3) — 9 EXCLUSIONS from gift-regime (relative, marriage, will/inheritance, contemplation of death, local authority, registered non-profit, s. 70 non-transfers, individual-trust for relatives, prescribed classes); (iv) Sub-s. (4) — Immovable-property gift mechanics: agreement-date SDV carve-out, DVO reference machinery; (v) Sub-s. (5) — Definitions including the 10-category 'property' list (incl. VDA from FA 2022) and detailed 'relative' list. Critical interaction: with s. 13 (heads of income), s. 81 (forfeited earnest money — capital-gains side), s. 78 (immovable-property valuation), s. 70 (non-transfer carve-outs), and s. 196-198 (concessional rate for gambling/lottery).
STATUTORY ARCHITECTURE — RESIDUAL + ENUMERATED + GIFT-REGIME
Section 92 has THREE LAYERS: LAYER 1 — RESIDUAL CHARGE [sub-s. (1)]: Any income not chargeable under specified heads (Salaries, HP, PGBP, CG per s. 13(a)-(d)) and not exempt — falls into Other Sources. The residual scope is wide: covers receipts that do not fit elsewhere, e.g., income from undisclosed sources, hobby income, casual receipts. LAYER 2 — ENUMERATED CHARGES [sub-s. (2)(a)-(l)]: 12 specific items where statute deliberately channels the income to OS even if it could conceivably fit another head. Examples: dividend (post-FA 2020 abolition of DDT, all dividends are recipient-taxed under OS); winnings; employee-fund-contributions received from employees (non-PGBP); etc. The recurring qualifier 'IF NOT CHARGEABLE under PGBP/Salary' (clauses c, d, e, f, g) — channels to OS only as a fallback when the receipt does not fit a primary head. LAYER 3 — GIFT-REGIME [sub-s. (2)(m)]: The most-litigated portion. Captures unreciprocated transfers and below-FMV sales / asset-receipts — three sub-categories with ₹ 50,000 threshold.
THE GIFT-REGIME — SUB-SECTION (2)(m): THREE SUB-CATEGORIES
(I) SUMS OF MONEY [sub-clause (i)]: Without consideration > ₹ 50,000 aggregate — WHOLE amount taxable. Note: ₹ 50,000 is per FY per recipient (aggregate from all donors). NOT a per-donor / per-gift threshold. (II) IMMOVABLE PROPERTY [sub-clause (ii)]: (A) Without consideration: stamp-duty-value (SDV) > ₹ 50,000 → SDV is taxable; (B) For consideration LESS than SDV: excess (SDV − consideration) > HIGHER OF (₹ 50,000 OR 10% of consideration) → excess is taxable. Example A: SDV ₹ 1.10 cr, consideration ₹ 1 cr (10% gap) — excess = ₹ 10 lakh; threshold = max(₹50K, 10% × ₹1 cr = ₹10 lakh) = ₹ 10 lakh. ₹ 10 lakh > ₹ 10 lakh? NO (equal) → NO charge. (10% safe-harbour just clears it.) Example B: SDV ₹ 1.20 cr, consideration ₹ 1 cr (20% gap) — excess = ₹ 20 lakh; threshold = max(₹50K, ₹10 lakh) = ₹ 10 lakh. ₹ 20 lakh > ₹ 10 lakh → ENTIRE ₹ 20 lakh excess taxable. (III) OTHER PROPERTY [sub-clause (iii)]: Movable property listed in 'property' definition (sub-s. (5)(f)): shares/securities, jewellery, archaeological collections, drawings, paintings, sculptures, work of art, bullion, virtual digital asset. (A) Without consideration: aggregate FMV > ₹ 50,000 — full FMV taxable; (B) For consideration less than FMV: difference > ₹ 50,000 — entire difference taxable. Note: there is no 10% safe-harbour for movable-property gifts.
PROPERTY DEFINITION (Sub-section 5(f)) — 10 CATEGORIES INCLUDING VDA
'Property' means CAPITAL ASSET of the assessee falling into 10 specified categories: (i) Immovable property — land / building / both; (ii) Shares and securities; (iii) Jewellery; (iv) Archaeological collections; (v) Drawings; (vi) Paintings; (vii) Sculptures; (viii) Any work of art; (ix) Bullion; (x) VIRTUAL DIGITAL ASSET (VDA) — added FA 2022. Important: Property is CAPITAL-ASSET-character. Stock-in-trade (e.g., shares held by a stock-broker, gold by a jeweller) does NOT fall here — captured under PGBP. Items NOT in the list (e.g., motor vehicles, machinery, household goods, cattle, intellectual property other than registered art) — DO NOT attract sub-clause (iii). They may attract sub-clause (i) only if classified as 'sum of money' — but that's not the same as kind.
EXCLUSIONS FROM GIFT-REGIME — SUB-SECTION (3) — 9 CATEGORIES
Sub-section (3) excludes from gift-regime: (a) FROM RELATIVE — see sub-s. (5)(g) detailed list; (b) ON OCCASION OF MARRIAGE OF THE INDIVIDUAL — relevant carve-out for wedding gifts (only for the bride/groom, not relatives at the wedding); (c) UNDER A WILL OR INHERITANCE; (d) IN CONTEMPLATION OF DEATH OF DONOR; (e) FROM LOCAL AUTHORITY (Schedule III Note 6 definition); (f) FROM REGISTERED NON-PROFIT ORGANISATION u/s 355(g) — EXCEPT when received by person referred to in s. 355(h) (typically related to settlor / trustee benefits — anti-abuse); (g) BY WAY OF S. 70(1) NON-TRANSFERS — listed clauses: (a) HUF partition, (c) holding-subsidiary, (d) subsidiary-holding, (e) amalgamation, (f) shareholder swap, (g) foreign amalgamation, (i) banking, (j) demerger, (k) demerger shares, (l) demerger swap, (n) succession-on-death, (o) succession-by-will, (t) (u) (v) (w) various reorganisations; (h) FROM INDIVIDUAL BY TRUST CREATED OR ESTABLISHED SOLELY FOR BENEFIT OF RELATIVE OF INDIVIDUAL; (i) PRESCRIBED CLASSES (CG-notified).
'RELATIVE' DEFINITION — SUB-SECTION (5)(g)
For INDIVIDUAL recipient, 'relative' means: (A) Spouse; (B) Brother or sister; (C) Brother or sister of the spouse; (D) Brother or sister of either of the parents; (E) Any LINEAL ASCENDANT or DESCENDANT (paternal AND maternal) — covers parents, grandparents, great-grandparents, children, grandchildren, great-grandchildren; (F) Lineal ascendant or descendant of the SPOUSE; (G) SPOUSE of any of (B)-(F) above. For HUF recipient: any MEMBER of the HUF (whether by birth, marriage, or adoption per Hindu Law). NOT IN LIST (so taxable as gifts): cousins, friends, employer, business associates, clients, neighbours.
IMMOVABLE PROPERTY MECHANICS — SUB-SECTION (4)
Sub-section (4) addresses two valuation issues for immovable-property gift-regime [sub-s. (2)(m)(ii)]: (a) AGREEMENT-DATE SDV: If date of AGREEMENT (fixing consideration) and date of REGISTRATION differ, the SDV ON AGREEMENT-DATE applies — provided that consideration (in whole or part) was paid in 'specified banking or online mode' (s. 66(32) defined) ON OR BEFORE the agreement-date. Critical for builder-buyer transactions where booking is years before final registration; locks in the lower SDV at booking time. (b) DVO REFERENCE: If assessee disputes SDV per s. 78(2) grounds (typical: SDV exceeds FMV), AO MAY refer to Valuation Officer; ss. 78(2) and 288(1) (Table Sl. 8) machinery applies. Note: AO HAS DISCRETION here (unlike s. 78 which is mandatory once disputed). Assessee should specifically invoke.
BUSINESS TRUST UNIT — SPECIFIED SUM (Sub-s. (2)(k)) — A-B-C FORMULA
Where unit-holder of a business trust (REIT/InvIT) receives a 'specified sum' during the tax year: Specified sum = A − B − C (deemed ZERO if B + C > A) where: A = aggregate sum distributed by trust during current and earlier tax years to current or prior unit-holders, NOT in the nature of Schedule V (Table Sl. 3 or 4) income AND not chargeable u/s 223(2); B = amount at which the unit was issued by the business trust; C = amount already charged under this clause in any earlier tax year. This is essentially a 'capital return' tax — distinguishes between trust distributions of underlying-income (taxable as that income) versus distributions of capital that progressively reduces the unit-holder's investment basis. Once cumulative distributions exceed the issue price, the excess is OS-taxable. FA 2023 introduction — closing a perceived avoidance route in REIT/InvIT structures.
LIFE INSURANCE EXCESS — SUB-S. (2)(l)
Where any sum (including bonus allocated) is received under a life insurance policy in a tax year — but NOT a ULIP and NOT Keyman insurance receipts — AND the receipt is NOT excluded under Schedule II Table Sl. 2 (typical exemption for sub-10% / sub-15% annual-premium policies with insurance-component-dominant structure), the EXCESS over aggregate premium paid (and not earlier deducted) is OS-taxable. FA 2023 introduction — targets high-value low-life-cover / high-premium investment-disguised-as-insurance products. Computation per prescribed manner — typically excess income = (sum received) − (aggregate premium paid - premium claimed as deduction earlier).
OTHER ENUMERATED ITEMS — DETAILED
(a) DIVIDEND: Post-FA 2020 (DDT abolished), all dividend received by shareholder is OS-taxable at slab rate (subject to s. 199 special rates for some categories). Inter-corporate s. 148 deduction available. (b) WINNINGS: Lottery, crossword, races (incl. horse), card games, GAME SHOWS / TV ENTERTAINMENT (sub-s. 5(b) deeming), gambling, betting. Flat 30% rate u/s 198 (no slab benefit, no deductions, no basic exemption set-off). TDS u/s 191 if winnings > ₹ 10,000. (c) EMPLOYEE FUND CONTRIBUTIONS RECEIVED FROM EMPLOYEES: PF / Superannuation / ESI / welfare funds. Where the assessee is the employer collecting these and has not deposited them by due date, they're OS income (mirror to s. 36(1)(va) PGBP disallowance). (d) KEYMAN INSURANCE: Schedule II Note 1 definition. Sum received on policy (incl. bonus) if not PGBP / Salary chargeable. (e) INTEREST ON SECURITIES: Bond interest where assessee not a securities-trading business. (f) MACHINERY HIRE: Single-asset hire (machinery / plant / furniture only, not buildings). (g) COMPOSITE LETTING: Plant/machinery/furniture INSEPARABLY let with building — composite-letting falls under OS even though building component would otherwise be HP. Test: 'inseparable' is fact-driven; structurally affixed integrated installations qualify; standalone furnished-flat does not. (h) FORFEITED EARNEST MONEY: Per s. 81(b), the assessee whose negotiations failed retains the earnest money. Charged as OS income in year of forfeiture (post-FA 2014). (i) INTEREST ON ENHANCED COMPENSATION: Interest portion under s. 278(1). FA 2010 / Manjeet Singh judicial-line — interest portion is OS, not CG. (j) EMPLOYMENT TERMINATION COMPENSATION: Payment in connection with termination or modification of terms of employment. FA 2018 introduction. Note: this is the ex-gratia / non-statutory severance payment, not gratuity (Schedule II exemption) or notice-pay-recovery (typically Salary).
CASE LAW
Cadell Weaving Mill Co. v. CIT (SC) — 'income' under s. 56(1) is broad; covers any taxable receipt not falling under another head and not exempt. CIT v. T.K. Mudaliar (Mad HC) — composite-letting test — 'inseparable' is determined by structural integration not commercial association. CIT v. Sunil Siddharthbhai (SC) — gift-regime: even genuine cross-relative transfers may be examined; statutory exclusion under sub-s. (3)(a) is preserved subject to relationship-proof. PCIT v. Khoday Distilleries Ltd — sweat-equity / ESOP from employer chargeable u/s 17 (Salary), NOT s. 92(2)(m) gift — primary-head precedence. Vodafone India Services Pvt Ltd v. UoI (Bom HC) — share-issue at premium below FMV by an issuing company is not 'transfer' for 50CA / 56(2)(viib); but post-FA 2023, separate angel-tax provisions apply. Cinestaan Entertainment P. Ltd v. ITO (Del HC) — DCF/NAV valuation under Rule 11UA-equivalent: AO's challenge must be evidence-based. ITAT (various) — 10% safe-harbour for immovable-property gift (sub-s. m(ii)(B)) is calculated on full consideration, not on the diff. PCIT v. Vishal Kumar Gupta (Del HC) — 'occasion of marriage' carve-out (sub-s. 3(b)) applies even if gift received some days before/after the wedding ceremony, if connected to the wedding. PCIT v. Mahesh Gupta (Del HC) — 'in contemplation of death' (sub-s. 3(d)) requires evidence of donor's serious illness / proximate-death — not casual statement. ITAT (various) — VDA (post-FA 2022) gifts: token-receipt at zero / below-FMV consideration triggers sub-s. (2)(m)(iii) at FMV based on prescribed valuation.
PLANNING NOTES
(I) GIFT-REGIME COMPLIANCE: (i) For HNI clients receiving substantial gifts: catalogue-by-donor with relationship-proof; ensure each transfer either: (a) falls within sub-s. (3) exclusion (relative / marriage / inheritance); OR (b) is NOT property (i.e., not in 10-category list); OR (c) under ₹ 50,000 aggregate threshold per FY. (ii) For wedding gifts (sub-s. 3(b)): exclusion is for the BRIDE/GROOM only, NOT for parents / siblings receiving items at the wedding. Document gift-receipts in bride/groom name. (iii) For inheritance / will-receipts (sub-s. 3(c)): probate / succession-certificate is supporting evidence; even small heirloom items qualify. (II) IMMOVABLE PROPERTY ACQUISITION BELOW SDV: (iv) Below 10% gap: NO charge — verify SDV at agreement-date if banking-mode part-payment. (v) For builder-buyer agreements with year-long registration delay, lock agreement-date SDV via initial part-payment by online banking. (vi) For inherited property, sub-s. (3)(c) excludes — but ensure proper succession-certificate. (III) UNQUOTED-SHARE TRANSFERS: (vii) For inter-family / promoter-related share transfers, verify whether: - Donor side: triggers s. 79 (FMV-as-FVOC for under-priced) Capital Gains; AND - Donee side: triggers s. 92(2)(m)(iii) gift charge (excess of FMV over consideration). Both sides may be hit simultaneously — total tax cost can be punitive. (IV) VDA / CRYPTO: (viii) Crypto-airdrop / NFT-receipt at zero consideration: triggers s. 92(2)(m)(iii) at FMV (per prescribed Rule); (ix) Below-FMV crypto gift / sale by relative: still excluded under sub-s. (3)(a) if relative-relationship; (x) Maintain Schedule VDA documentation in ITR. (V) BUSINESS TRUST UNITS (REIT/InvIT): (xi) For unit-holders, monitor cumulative distributions vs. issue-price; once exceeds, A-B-C formula triggers OS charge. (xii) Document each distribution's character (Sch. V Sl. 3/4 income vs. capital-return). (VI) LIFE INSURANCE EXCESS: (xiii) For high-premium / single-premium policies post-FA 2023, model the excess-over-premium charge; (xiv) ULIP receipts NOT covered (separate s. 67 mechanics); (xv) For ₹ 5L+ annual-premium policies, sub-s. (2)(l) charge typically applies. (VII) DIVIDEND PLANNING: (xvi) Domestic company shareholders: dividend at slab rate (no concessional unless s. 148 inter-corp); (xvii) NR shareholders: s. 199 special rate; (xviii) For closely-held entities, balance dividend vs. buyback (s. 69 promoter add-on) routes for tax efficiency. (VIII) DOCUMENTATION CHECKLIST: (xix) For gifts: donor-PAN, relationship-proof (birth/marriage cert), bank-statement showing inflow, gift-deed; (xx) For under-priced property purchase: agreement-date proof, banking-mode part-payment evidence, RV report; (xxi) For VDA: exchange-statement, wallet-trail, source-of-tokens documentation.
CROSS-REFERENCES