New IT Act 2025 — Knowledge Bank

Deductions

Section 93 — Deductions

Old Act equivalent: Section 57 of IT Act 1961 Sub-part: F.—Income from other sources

Statutory Text

(1) The income chargeable under the head “Income from other sources” shall be computed after making the following deductions:—

(a) for interest on securities, any reasonable sum paid as commission or remuneration to a banker or any other person for the purpose of realising such interest on behalf of the assessee;

(b) for income of the nature referred to in section 92(2)(c), so far as may be, an amount as per section 29(1)(e);

(c) for income of the nature referred to in section 92(2)(f) and (g), so far as may be, an amount as per section 28(1)(a), (b), (d), section 33, and subject to the provisions of section 28(2);

(d) for income in the nature of family pension (a regular monthly amount payable by the employer to a family member of an employee upon the death of such employee), —

(i) an amount equal to one-third of such income or Rs. 25,000, whichever is less, where income-tax is computed under section 202(1); and

(ii) an amount equal to one-third of such income or Rs. 15,000, whichever is less, in any other case;

(e) any other expenditure (not being in the nature of capital expenditure) laid out or expended wholly and exclusively for making or earning such income;

(f) for income of the nature referred to in section 92(2)(i), an amount equal to 50% of such income and no other deduction shall be allowed under this section;

(g) for income in the nature of commutation of pension received from a fund as specified in Schedule VII (Table: Sl. No. 3), the entire amount;

(h) for income in the nature of gratuity as referred in section 19(2)(g), received on the death of the employee, the entire amount.

(2) Irrespective of anything contained in sub-section (1), in respect of any dividend income or income from units of a Mutual Fund specified under Schedule VII (Table: Sl. No. 20 or 21) or income from units of a specified company as referred to in section 2(h) of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 (58 of 2002), no deduction shall be allowed.

Sub-sections

Sub-section (1)

Eight categories of deductions from other sources income:

  • (a) Interest on securities: commission/remuneration to banker for realising interest
  • (b) Employee welfare fund contributions: deduction as per section 29(1)(e)
  • (c) Hire income from machinery/plant/furniture/buildings: rent, repairs, depreciation as per sections 28 and 33
  • (d) Family pension: 1/3 of income or Rs. 25,000 (new regime) / Rs. 15,000 (old regime), whichever is less
  • (e) General: any other revenue expenditure wholly and exclusively for earning the income
  • (f) Compensation interest (section 92(2)(i)): flat 50% deduction, no other deduction
  • (g) Commuted pension from specified fund: entire amount
  • (h) Death gratuity (as per section 19(2)(g)): entire amount

Sub-section (2)

No deduction allowed against dividend income or income from Mutual Fund units (Schedule VII, Sl. Nos. 20/21) or UTI units.

Provisos

None.

Explanations

None.

Tables

None.

Key Structure

  • Applies to: All income computed under the head “Income from other sources”
  • Deductions available:
    • Interest on securities: Banker’s commission for realisation (clause (a))
    • Employee fund contributions: Per section 29(1)(e) — employer’s deadline to deposit (clause (b))
    • Hire income: Rent, rates, taxes, repairs, insurance (section 28(1)(a),(b),(d)), depreciation (section 33) (clause (c))
    • Family pension: 1/3 or Rs. 25,000 (new regime) / Rs. 15,000 (old regime) — whichever is less (clause (d))
    • General expenditure: Revenue expenditure wholly and exclusively for earning such income (clause (e))
    • Compensation interest: Flat 50%, exclusive — no other deduction (clause (f))
    • Commuted pension from specified fund: Entire amount exempt (clause (g))
    • Death gratuity: Entire amount exempt (clause (h))
  • No deduction allowed (sub-section 2):
    • Dividend income
    • Mutual Fund unit income (Schedule VII, Sl. Nos. 20/21)
    • UTI unit income
  • Monetary limits: Family pension deduction — Rs. 25,000 (new regime) or Rs. 15,000 (old regime)

Cross-References

Amendment Notes

  • Finance Act 2026 amendment: Sub-section (1)(a) — substituted to remove dividend from the commission deduction. Prior text allowed commission deduction for both dividends and interest on securities; now only interest on securities qualifies.
  • Finance Act 2026 amendment: Sub-section (2) — substituted to remove the 20% interest expense deduction for dividend income. Now no deduction at all is allowed against dividend income, Mutual Fund income, or UTI income.

Practical Notes

  • The Finance Act 2026 changes are significant: dividend income is now fully taxable with zero deductions — no commission, no interest expense, nothing. This is a departure from the original IT Act 2025 provision which allowed 20% interest deduction.
  • Family pension deduction is computed separately — 1/3 of family pension or the cap, whichever is less. The new regime cap (Rs. 25,000) is higher than the old regime cap (Rs. 15,000).
  • The 50% flat deduction for compensation interest (clause (f)) is exclusive — no other deduction can be claimed against this income.
  • Death gratuity (clause (h)) and commuted pension from specified funds (clause (g)) get full exemption — entire amount is deductible.
  • The general expenditure deduction in clause (e) requires the expenditure to be: (i) not capital in nature, and (ii) wholly and exclusively for earning the income — the same test as PGBP.

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