Section 94 — Amounts not deductible
Old Act equivalent: Section 58 of IT Act 1961 Sub-part: F.—Income from other sources
Statutory Text
(1) Irrespective of anything contained in section 93, the following amounts shall not be deductible in computing the income of any assessee chargeable under the head “Income from other sources”:—
(a) any personal expenses of the assessee; or
(b) any interest chargeable under this Act, payable outside India, on which tax has not been paid or deducted under Chapter XIX-B; or
(c) any payment chargeable under the head “Salaries”, if it is payable outside India, unless tax has been paid or deducted under Chapter XIX-B.
(2) The provisions of sections 29, 35(b)(i), and 36 shall apply in computing the income chargeable under the head “Income from other sources” as they apply in computing the income chargeable under the head “Profits and gains of business or profession”.
(3) For an assessee, being a foreign company, the provisions of section 59 shall apply in computing the income chargeable under the head “Income from other sources”, as they apply in computing the income chargeable under the head “Profits and gains of business or profession”.
(4) In computing the income from 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, no deduction for any expenditure or allowance related to such income shall be allowed under this Act.
(5) Sub-section (4) shall not apply in computing the income of an assessee, being the owner of horses maintained for running in horse races, from the activity of owning and maintaining such horses.
(6) For the purposes of this section, the expression “horse race” means a horse race upon which wagering or betting may be lawfully made.
Sub-sections
Sub-section (1)
Three absolute disallowances: (a) personal expenses; (b) foreign interest without TDS; (c) foreign salary without TDS.
Sub-section (2)
Import of PGBP disallowance provisions: sections 29 (employee welfare), 35(b)(i) (non-deductible amounts), and 36 (expenses/payments not deductible in certain circumstances) apply as they do for PGBP.
Sub-section (3)
Foreign company: section 59 (royalty/FTS computation for non-residents) applies for computing other sources income.
Sub-section (4)
Lottery, gambling, card games, betting: no deduction for any expenditure or allowance is permitted.
Sub-section (5)
Exception to sub-section (4): horse race owners maintaining horses for racing can claim deductions.
Sub-section (6)
Definition: “horse race” means one upon which wagering or betting may be lawfully made.
Provisos
None.
Explanations
None.
Tables
None.
Key Structure
- Applies to: All income computed under the head “Income from other sources”
- Absolute disallowances (sub-section 1):
- Personal expenses of the assessee
- Interest payable outside India without TDS under Chapter XIX-B
- Salary payable outside India without TDS under Chapter XIX-B
- Imported PGBP disallowances (sub-section 2):
- Section 29 — Employee welfare fund contribution deadlines
- Section 35(b)(i) — Amounts not deductible in certain circumstances
- Section 36 — Expenses/payments not deductible (cash payments over limits, etc.)
- Foreign companies (sub-section 3): Section 59 (royalty/FTS non-resident computation) applies
- Lottery/gambling/betting (sub-section 4): Zero deductions — gross amount is taxable
- Exception (sub-section 5): Horse race owners maintaining horses for racing can claim deductions against horse racing income
Cross-References
- s093-deductions — Section 93: deductions from other sources (this section overrides section 93 for specific items)
- s092-charging — Section 92: charging section
- s029-deductions-related-to-employee-welfare — Section 29: employee welfare (imported via sub-section (2))
- s035-amounts-not-deductible-in-certain-circumstances — Section 35(b)(i): non-deductible amounts (imported via sub-section (2))
- s036-expenses-or-payments-not-deductible-in-certain-circumstances — Section 36: expenses not deductible (imported via sub-section (2))
- s059-computation-of-royalty-and-fee-for-technical-services-in-han — Section 59: non-resident royalty/FTS computation (imported via sub-section (3))
- _index — Chapter XIX-B: TDS compliance for foreign payments (sub-section (1)(b), (c))
Amendment Notes
- Finance Act 2026 amendment: Sub-section (2) was amended — the reference was changed from “sub-section (1)(a)(i) or (b)” to the current text. This is a technical correction to align cross-references.
Practical Notes
- Sub-section (4) is critical for lottery and gambling income: the entire gross amount is taxable — no expenses, no allowances, nothing can be deducted. This applies to game shows, online gaming, and all forms of betting.
- The exception in sub-section (5) for horse race owners is narrow: only the owner who maintains horses for racing can claim deductions — a person who merely bets on horse races cannot.
- The import of PGBP disallowance provisions through sub-section (2) means that cash payment restrictions (section 36), employee fund deposit deadlines (section 29), and other PGBP disallowances apply equally to other sources income.
- For foreign interest and salary payments, TDS compliance under Chapter XIX-B is a prerequisite for deduction — if TDS is not paid/deducted, the expense is disallowed outright.