Section 93 Income Tax Act 2025: Which Deductions Are Allowed from Income from Other Sources?
Section 93 of the Income-tax Act, 2025 specifies the deductions available when computing income taxable under the head "Income from other sources". The provision must be read with Section 92 (chargeability) and Section 94 (amounts not deductible).
What does Section 93 provide?
Section 92 brings specified receipts and residual taxable income under the head "Income from other sources". Section 93 permits only the deductions described in that provision, subject to the restrictions in Section 94 and other applicable provisions. A taxpayer should establish the nature of each receipt and maintain evidence for expenses claimed.
Deductions permitted under Section 93(1)
1. Collection expenses on interest on securities - Section 93(1)(a)
A reasonable commission or remuneration paid to a banker or another person for realising interest on securities on behalf of the assessee may be deducted. Following the Finance Act, 2026 amendment, this clause concerns interest on securities, not dividend collection expenses.
2. Employees' contributions to welfare funds - Section 93(1)(b)
Where amounts received from employees are taxable under Section 92(2)(c), the deduction is determined, as far as applicable, under Section 29(1)(e). The statutory conditions governing payment and timing must be satisfied; merely recording the liability does not establish entitlement.
3. Letting of machinery, plant, furniture and inseparable buildings - Section 93(1)(c)
For income falling within Section 92(2)(f) or (g), the specified deductions under Section 28(1)(a), (b) and (d), and depreciation under Section 33, may apply, subject to Section 28(2). The correct treatment depends on the nature of the assets, expenses and letting arrangement.
4. Family pension - Section 93(1)(d)
Family pension means a regular monthly amount payable by an employer to a family member after an employee's death. The deduction is the lower of one-third of the family pension or:
- Rs. 25,000 where income tax is computed under Section 202(1); or
- Rs. 15,000 in other cases.
These are alternative limits, not additional deductions.
5. Other expenses incurred wholly and exclusively to earn income - Section 93(1)(e)
Other non-capital expenditure incurred wholly and exclusively for making or earning taxable income from other sources may be deductible. Personal expenditure and expenses unrelated to earning the income do not qualify. The restriction in Section 93(2) takes precedence for dividend and specified unit income.
6. Interest on compensation or enhanced compensation - Section 93(1)(f)
For income covered by Section 92(2)(i), a deduction equal to 50% of that interest income is allowed. No other deduction under Section 93 is available against that income.
7. Specified commuted pension - Section 93(1)(g)
The entire amount of commuted pension received from a fund specified in Schedule VII (Table: Sl. No. 3) is deductible under this clause, subject to the statutory characterisation of the receipt.
8. Gratuity on death of employee - Section 93(1)(h)
The entire amount of gratuity of the nature referred to in Section 19(2)(g), received on the employee's death, is deductible as provided in this clause.
Can expenses or loan interest be deducted from dividends?
No, under the amended Section 93(2). Irrespective of Section 93(1), no deduction is allowed against dividend income or income from the mutual fund units or specified company units identified in Section 93(2). This reflects the substitution made by the Finance Act, 2026 effective 1 April 2026. The earlier provision allowing certain interest expenses up to 20% should not be used for tax years governed by the amended text.
Practical illustrations
Example 1: Family pension under Section 202(1)
Assume annual family pension of Rs. 90,000. One-third is Rs. 30,000; the applicable cap is Rs. 25,000. The deduction is Rs. 25,000 and the balance is Rs. 65,000, before any other applicable computation rules.
Example 2: Family pension outside Section 202(1)
Assume annual family pension of Rs. 90,000. One-third is Rs. 30,000, but the cap is Rs. 15,000. The deduction is Rs. 15,000 and the balance is Rs. 75,000.
Example 3: Interest on enhanced compensation
Assume taxable interest of Rs. 2,00,000 received on enhanced compensation. The Section 93(1)(f) deduction is Rs. 1,00,000 (50%); the remaining Rs. 1,00,000 is computed under the relevant head, subject to other applicable provisions.
Example 4: Dividend funded by borrowing
Assume dividend income of Rs. 1,00,000 and borrowing interest of Rs. 18,000 attributable to acquiring the shares. Under amended Section 93(2), no deduction is allowed against that dividend income. The former 20% ceiling is not available under the amended provision.
Relevant statutory definitions and cross-references
Frequently asked questions
Is the family pension deduction Rs. 25,000 for everyone?
No. The Rs. 25,000 ceiling applies where income tax is computed under Section 202(1). In other cases, the ceiling is Rs. 15,000. In each case the deduction cannot exceed one-third of the family pension.
Can interest paid on a loan taken to purchase dividend-paying shares be deducted?
Not against dividend income under amended Section 93(2), effective from 1 April 2026.
Is the 50% deduction available for all interest income?
No. Section 93(1)(f) applies specifically to income referred to in Section 92(2)(i), namely interest on compensation or enhanced compensation.
Are all expenses incurred to earn other-source income deductible?
No. Expenses must satisfy the relevant statutory clause and restrictions. Section 94 also disallows specified amounts, and Section 93(2) expressly overrides the general deduction provisions for dividend and specified unit income.
Statutory references
Read the current amended legislation and relevant connected provisions before relying on an exemption or deduction for a particular tax year.
Updated: 10 November 2026. General legal information; applicability depends on the tax year, facts and amendments in force.