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Deductions under Section 57

Ritik Chopra 
on 21 April 2021

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The taxable income under the head 'Income from Other Sources' shall be computed after allowing the following deductions as provided in Section 57

1. In case of Dividends and Interest on Securities

From the dividend income, deduction shall be allowed in respect of any sum spent by way of commission or remuneration to a banker or another person as collection charges for receiving the dividend or Interest on Securities.

2. Repairs, depreciation, etc. in case of letting of machinery, plant or furniture with or without building

The following deductions shall be allowed from the income earned by letting of machinery, plant or furniture with or without building.

(i) Expenditure incurred on current repairs of plant, machinery, furniture or building.

(ii) Insurance premium paid regarding these assets.

(iii) Depreciation on plant, machinery and furniture. Depreciation in respect of buildings will be allowed only if the assessee is the owner. It will not be allowed if the assessee is lessee or mortgagee in possession of the building.

Deductions under Section 57

3. Deduction in respect of employee's contribution in staff welfare schemes [57 (ia)]

Any amount received by employer from his employees as their contribution of provident fund, E.S.I Fund or superannuation fund is deemed as income u/s 59(ic) if not taxable under the head "profits and gains of business or profession". In case employer deposits any amount (out of these incomes) in these funds before prescribed due date, such amount is allowed as deduction u/s 57 (ia).

4. Standard Deduction out of Family Pension [Section 57 (iia)]

In case of income in the nature family pension, a deduction of a sum equal to 1/3rd of such pension or 15,000 whichever is less, shall be allowed.

Family pension means a regular monthly amount payable by employer to the legal heirs of deceased employee.

5. Deduction from any other income [Section 57(iii)]

Any expenditure which is spent to earn an income changeable to tax under this head shall be deducted from such income. This deduction is not admissible to assessee being a foreign company.

 

To claim this deduction following conditions must be satisfied :

(i) The expenditure should be incurred solely for earning such income.
(ii) It should not be in the nature of capital expenditure.
(iii) It should not be in the nature of personal expense.
(iv) It should be incurred in the relevant accounting year.

6. Deduction from royalties received by authors

(Other than those writing for films)-Actual expenses can be claimed as deduction.

7. Deduction regarding interest on compensation or enhanced compensation

In case the assessee has received any income of this type, a deduction of a sum equal to 50% of such income shall be allowed and no deduction shall be allowed under other clause of this section.

 

Amount Expressly Disallowed [Section 58]

The following expenses are not allowed to be deducted from such income:

In case of any assessee-

(i) any personal expenses of the assessee.

(ii) Any interest chargeable under this Act which is payable outside India on which tax has not been paid or deducted at source.

(iii) Any payment which is chargeable under the head 'Salaries' if it is payable outside India unless tax has been paid or deducted at source.

(iv) In case an assessee has income from lotteries, crossword puzzles, races including horse races, card games and other games of any sort or from gambling or betting of any form or nature whatsoever, such assessee shall not be allowed any deduction in respect of any expenditure or allowance in connection with such incomes.


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