Amounts not deductible
[Section-94 as per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
Section 94(1) of Income Tax Act 2025
94(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.
Section 94(2) of Income Tax Act 2025
94(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”.
Section 94(3) of Income Tax Act 2025
94(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”.
Section 94(4) of Income Tax Act 2025
94(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.
Section 94(5) of Income Tax Act 2025
94(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.
Section 94(6) of Income Tax Act 2025
94(6) In this section, “horse race” means a horse race upon which wagering or betting may be lawfully made.
FAQs on Section 94 of Income Tax Act 2025
What does Section 94(1) of the Income Tax Act, 2025 specify?
Section 94(1) lists amounts that are not deductible when computing income under the head “Income from other sources.”
Which personal expenses are allowed as deductions under Section 94(1)?
No personal expenses of the assessee are allowed as deductions.
Is interest payable outside India deductible if tax is not paid or deducted?
No, interest chargeable under this Act and payable outside India is not deductible unless tax has been paid or deducted under Chapter XIX-B.
Can salary payments made outside India be deducted under Section 94(1)?
Salary payments made outside India are not deductible unless tax has been paid or deducted under Chapter XIX-B.
Do the provisions of business income computation apply to income from other sources?
Yes, as per Section 94(2), the provisions of sections 29, 35(b)(i), and 36 apply similarly.
What does Section 94(2) state about deductions under ‘Income from Other Sources’?
It states that provisions applicable to ‘Profits and gains of business or profession’ under sections 29, 35(b)(i), and 36 also apply when computing ‘Income from other sources.’
How are foreign companies treated under Section 94(3)?
For foreign companies, the provisions of section 59 apply when computing income under ‘Income from other sources’ as they apply for ‘Profits and gains of business or profession.’
Is any deduction allowed for expenditure on lottery winnings or gambling income?
No, as per Section 94(4), no deduction for any expenditure or allowance related to such income is allowed.
What types of winnings are covered under Section 94(4)?
Winnings from lotteries, crossword puzzles, races including horse races, card games, gambling, betting, and other games of any sort are covered.
Is there any exception to the restriction on deductions for winnings from horse races?
Yes, Section 94(5) provides that the restriction does not apply to an assessee who owns horses maintained for racing.
Who can claim deductions related to horse races under Section 94(5)?
Owners of horses maintained for running in horse races can claim related deductions.
What is the meaning of ‘horse race’ under Section 94(6)?
‘Horse race’ refers to a race upon which wagering or betting may lawfully be made.
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