Section 58 of Income Tax Act 1961: Amounts Not Deductible

Section 58 of the Income Tax Act, 1961 restricts deductions while computing income under the head "Income from other sources". It operates as an exception to the deductions otherwise available under section 57.

Important from 1 April 2026: The Income-tax Act, 2025 has replaced the Income-tax Act, 1961 for tax years beginning on or after 1 April 2026. Section 58 of the new Act is a different provision dealing with presumptive taxation. The discussion on this page concerns section 58 of the Income Tax Act, 1961 and remains relevant to earlier tax years and proceedings preserved under the transition and savings provisions.
On this page

Meaning and scope of section 58

Income taxable under "Income from other sources" is generally computed after allowing deductions permitted by section 57. Section 58 overrides that general rule for specified expenses and payments. Where section 58 applies, the specified amount cannot be deducted even if a deduction might otherwise appear available under section 57 or another provision.

In simple terms: section 57 identifies deductions that may be claimed against income from other sources, while section 58 identifies important amounts that must be disallowed or restricted when that income is computed.

Section 58(1): Specific amounts not deductible

For the Income Tax Act, 1961, section 58(1) provides that, notwithstanding section 57, specified amounts are not deductible while computing income from other sources.

ProvisionEffect
Section 58(1)(a)(i)Personal expenses of the assessee are not deductible.
Section 58(1)(a)(ia)Expenditure of the nature referred to in section 40A(12) is not deductible.
Section 58(1)(a)(ii)Certain interest payable outside India is disallowed where the required tax has not been paid or deducted under the applicable TDS provisions, subject to the statutory exception for specified old public subscription loans.
Section 58(1)(a)(iii)A salary payment outside India is not deductible unless tax has been paid or deducted as required by the TDS provisions.

Personal expenses

A personal expense has no allowable connection with earning taxable income from other sources. Section 58 expressly prevents such expenditure from being deducted.

Payments outside India and TDS compliance

The provisions concerning interest and salary payable outside India link deductibility to compliance with tax deduction requirements. For transactions arising from 1 April 2026, withholding obligations are governed by the Income-tax Act, 2025; liabilities and proceedings relating to earlier periods continue to be governed by the applicable saved provisions of the 1961 Act.

Section 58(1A): Application of section 40 disallowances

Section 58(1A) applies specified disallowance rules contained in section 40(a) to the computation of income from other sources, so far as those rules can be applied. The purpose is to carry relevant tax-compliance based restrictions from business-income computation into the computation of income from other sources.

Section 58(2): Section 40A also applies

Section 58(2) provides that section 40A applies, so far as may be, when computing income from other sources in the same manner in which it applies while computing profits and gains of business or profession. Section 40A contains overriding restrictions concerning specified expenses or payments.

Section 58(3): Foreign companies and section 44D

For a foreign company having income chargeable under "Income from other sources", section 58(3) applies section 44D, so far as may be, in the same manner as it applies in computing profits and gains of business or profession. Section 44D concerns the special computation of certain royalty and fees for technical services income of foreign companies under the circumstances covered by that provision.

Section 58(4): Winnings, gambling and betting

Section 58(4) denies a deduction for expenditure or allowance connected with specified winnings, including lotteries, crossword puzzles, races including horse races, card games and other games, gambling or betting. The statutory proviso makes an exception for computation of income of an assessee who owns and maintains horses for running in horse races.

For this purpose, "horse race" means a horse race on which wagering or betting may lawfully be made.

Practical point: The section should be read together with the charging and deduction provisions applicable to income from other sources. The exact treatment depends on the nature of the receipt, the relevant tax year and the law governing that tax year.

This article explains the statutory framework for general information. For a particular assessment, proceeding or transaction, check the law applicable to the relevant tax year and the latest official notifications, rules and judicial decisions.