“Casual income” typically refers to income that is irregular, infrequent, and not earned through regular employment.

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It often includes income from occasional or one-time activities that are not part of an individual’s regular source of earnings. Casual income can come from various sources, such as winnings, gifts, or occasional services provided.

Under the Income Tax Act, the taxation of casual income depends on the nature of the income and the applicable provisions. Here are some key points related to casual income under the Income Tax Act:

Gifts:

Gifts received are generally not considered as income and are not taxable under the Income Tax Act. However, there are certain exceptions and conditions. For instance, gifts received from non-relatives above a specified limit may be subject to tax.

Winnings and Prizes:

Income from winnings, such as lottery prizes, game show winnings, or awards, may be subject to taxation. The Income Tax Act may specify the tax treatment of such income, and there could be provisions for a certain threshold below which winnings may not be taxable.

Occasional Services:

If an individual provides occasional services and earns income from such services, that income is taxable under the Income Tax Act. The tax treatment depends on the nature of the services and whether the individual is engaged in a business or profession.

Other Casual Income:

Other forms of casual income, such as income from the sale of personal assets (like paintings, jewelry, or antiques), may also have specific tax implications. The tax treatment will depend on the nature of the transaction and whether it falls under the purview of capital gains.

Tax Deductions and Exemptions:

Some casual income may be eligible for certain deductions or exemptions. For example, if an individual sells a property, there might be provisions for exemptions on capital gains if the proceeds are reinvested in another property.

It’s essential to consult the specific provisions of the Income Tax Act in the relevant jurisdiction to determine the tax treatment of casual income. Tax laws can vary, and the treatment of different types of income may be subject to exemptions, deductions, and varying rates based on the circumstances of the taxpayer and the nature of the income. Taxpayers should seek professional advice to ensure compliance with applicable tax regulations.