What is Casual Income in Income Tax?

Wondering what do you mean by casual income? Casual income in the context of income tax in India refers to earnings derived from irregular or sporadic activities rather than from regular employment or business operations.

This type of income is typically not the primary source of income for individuals but arises from occasional services rendered, temporary work, or one-time events such as winnings from lotteries or game shows.

What do you Understand by Casual Income?

Under the Indian Income Tax Act, 1961, casual income is taxable under the head "Income from Other Sources." This category encompasses all income that doesn't fall under the heads of salaries, house property, business or profession, or capital gains. Thus, any income earned through casual activities, even if infrequent, is subject to taxation.

This is the basic meaning of casual income in income tax.

• Winnings 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.

• Income from occasional or one-time freelance services, such as consulting, writing, or graphic design.

• Fees or honorariums received for participating in surveys, research studies, or as a guest lecturer.

• Income from occasional rental of personal assets like a car, camera, or property not used for business purposes.

• Prizes won in competitions, reality shows, or game shows.

Taxation on casual income is based on the individual's total income for the financial year. The income tax rates applicable to casual income are the same as those for other sources of income, according to the prevailing income tax slabs.

It's important for individuals earning casual income to maintain proper records and documentation of their earnings and expenses related to the casual activities. This helps in accurately calculating the taxable income and ensures compliance with the tax laws of India.

This is what do you mean by casual income.

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Hey Friend,

As its name implies, casual income is one-time only. Just to reiterate what

F

’s answer about the casual income meaning, I would like to say that it's a one-time income that is unlikely to happen again in a year. This income is neither foreseen nor guaranteed by any contract. Any non-recurring, sporadic receipts are considered casual income.

Casual income examples, for instance, are money received as a prize from lotteries, and sporting events, including horse races, crossword puzzles, etc.

With regards to the casual income tax rate, in accordance with section 115BB of the Income Tax Act, casual income is deductible under the heading "Income from Other Sources." Casual income is subject to a flat tax of 30%, which becomes 31.2% when the cess is included.

• Casual incomes do not include capital gains, earnings from a job or business, or one-time advantages like employee bonuses.

• As a reward for effort and skill, the winnings from motor car rallies cannot be taxed as casual income. It is not counted as casual income when winning is the result of ability and effort.

• Lottery held as stock in trade shall be taxed under PGBP and not other income because the lottery-holding individual is engaging in business activity.

No expense may be subtracted from a casual income. Such income is not eligible for a deduction under sections 80C or 80D of the Income Tax Act.

I would like to conclude here about the casual income meaning. I hope this helps:)

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I have read some facts about casual income, let me share them with you. The head 'Income from Other Sources' is charged on any income, earnings, or gains that are included in your overall revenue but cannot be included under either of the previous categories of income. As a result, this head is known as the residuary head of income since it includes all of your taxable income, earnings, or profits that lie outside the range of any other head. As a result, any revenue, profit, or gain that does not exactly fit in any of the other particular headings but is taxable under the Act's requirements will be taxed under this heading. Let me tell you what is casual income.

What is casual income in income tax?

Casual income is not a regular source of revenue. It's a one-time income that is unlikely to happen again in the coming year. Any agreement does not anticipate or provide for this income. Casual incomes include winnings from the lottery, poker games, quiz shows, sports betting, solving puzzles, and other games. Lotteries allow people to win money through winning prizes, drawing lots, or by chance. Casual income is unpredictable and unpredictably distributed. Aside from these, casual income refers to any unexpected and unscheduled income.

Casual Income's Tax Implications:

1) Casual income is taxed under section 115BB of the Income Tax Act, under the heading "Income from Other Sources." Casual income is taxed at a fixed rate of 30%, which is increased to 31.2 percent when the cess is added. 

2) For example, if your casual income is Rs.3 lakh, you will owe a tax of 90,000 plus the education fee on the amount. 

3) Casual income is shown in net and overall income, but it is removed from overall total income when determining a person's or company's tax responsibility.

4) If the cash prize is more than Rs 20,000 and is paid in cash, check, or demand draught, the winner will get the prize money after 31.2 percent TDS (Tax Deduction at Source).

5) If the reward is in kind, such as a car, the prize supplier must guarantee that the tax is paid prior to awarding the prize.

6) If the prize money is awarded both in money and in type, the total tax will be computed based on the cash received and the market price of the prize awarded in kind.

This guides you very well about what is casual income.