Section 93 · Computation of total income
Section 93 of the Income-tax Act, 2025 — Deductions from Income from Other Sources
By CA Rajat Agrawal
Updated 04 Jul 2026
Chapter IV
📜 What the law says — Section 93, Income-tax Act 2025
93. (1) The income chargeable under the head “Income from other sources”
shall be computed after making the following deductions:—
10b
[(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 ` 25000, whichever
is less, where income-tax is computed under section 202(1); and
(ii) an amount equal to one-third of such income or ` 15000, whichever
is less, in any other case;
10b. Substituted by the Finance Act, 2026, w.e.f. 1-4-2026. Prior to its substitution, clause (a)
read as under :
“(a) for dividends [excluding those referred to in section 2(40)(f)] or interest on securi-
ties, any reasonable sum paid as commission or remuneration to a banker or any
other person for the purpose of realising such dividend or interest on behalf of the
assessee;”
(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), re-
ceived on the death of the employee, the entire amount.
[(2) Irrespective of anything contained in sub-section (1), in respect of any dividend
10c
income or income from units of a Mutual Fund specifi
In plain language
What Section 93 is about
Section 93 of the Income-tax Act, 2025 tells you which expenses you are allowed to subtract before paying tax on income that falls under the head "Income from Other Sources" (computed under Section 92). The basic idea is simple and fair: you are taxed only on your net income, so genuine costs incurred to earn that income can be deducted. Section 93 is the direct successor to Section 57 of the old Income-tax Act, 1961, and it carries forward almost the same scheme, with the family-pension limits updated.
Who it applies to
- Anyone earning "other sources" income — dividends, interest, rent from letting machinery/plant/furniture, family pension, income from a will's estate, casual receipts and so on.
- Family pensioners — spouses/dependants receiving pension after the death of an employee.
- Investors in shares, mutual fund units and specified companies who borrow money to invest.
Key deductions allowed under Section 93
- Collection charges: Any reasonable commission or remuneration paid to a banker or other person for the purpose of realising dividend or interest.
- Interest on money borrowed to earn dividend / MF income — capped at 20%: For dividend income (other than exempt dividends) and income from units of a Mutual Fund or a specified company, the only deduction allowed is interest expense, and it is limited to 20% of that income included in total income (before this deduction). Nothing else can be claimed against such income.
- Family pension standard deduction: One-third of the family pension or a monetary cap, whichever is lower — the cap is ₹25,000 where tax is computed under the default regime (Section 202(1)) and ₹15,000 in any other case.
- Letting of plant, machinery, furniture (with or without building): The related expenses — current repairs, insurance, and depreciation — are allowed (cross-referenced to the business-income provisions).
- 50% deduction for compensation on employment termination / modification: For income of the nature in Section 92(2)(i), a flat 50% of such income is deductible and no other deduction is allowed against it.
- Commuted pension and death gratuity: Commutation of pension received from a fund specified in Schedule VII, and gratuity received on the death of an employee, are deductible in full.
- General residual deduction: Any other expenditure — not capital in nature — laid out wholly and exclusively for making or earning the income.
How it interacts with related sections
- Section 92 decides what is taxable as other sources; Section 93 decides what you can deduct from it.
- Section 94 is the override: even if Section 93 would allow a deduction, Section 94 bars personal expenses, and interest/salary payable outside India where tax was not deducted (Chapter XIX-B / TDS).
- Section 202(1) is the default (new) tax regime — it fixes the ₹25,000 family-pension cap. Under the old regime the cap stays ₹15,000.
Practical implications
- No standard "10-lakh" free ride on interest: If you take a loan to buy shares or MF units, your interest write-off is throttled at 20% of the dividend/MF income — a big change taxpayers often miss.
- Keep proof: Bank collection charges, loan interest certificates and repair bills must be documented; the "wholly and exclusively" test is strictly read.
- Capital costs are never allowed here — only revenue expenses.
💡 Example
Example 1 — Family pension: Mrs. Sharma receives a family pension of ₹1,20,000 in FY 2026-27 after her husband's death and files under the default regime (Section 202(1)). Her deduction is the lower of one-third of ₹1,20,000 (= ₹40,000) or ₹25,000. So she deducts ₹25,000, and only ₹95,000 is taxable under "Income from Other Sources."
Example 2 — Interest on loan to earn dividends: Rahul earns ₹2,00,000 of taxable dividend income and paid ₹60,000 as interest on a loan taken to buy those shares. Under Section 93, interest is capped at 20% of the dividend income = 20% of ₹2,00,000 = ₹40,000. He can deduct only ₹40,000 (not the full ₹60,000), so his net taxable dividend is ₹1,60,000. The disallowed ₹20,000 is simply lost.
A short story: Anil rented out an old generator set and some furniture to a local event company for ₹3,00,000 a year. He assumed this was "business," but since he isn't in the rental trade, it falls under Income from Other Sources. Thanks to Section 93, he still deducts the generator's repairs, insurance and depreciation — bringing his taxable rent down to what he actually pocketed, not the gross ₹3,00,000.
| Type of income | Deduction allowed under Section 93 | Limit / condition |
|---|
| Dividend / interest on securities | Commission or remuneration to banker for realising it | Must be a reasonable sum |
| Dividend (non-exempt) / MF units / specified company units | Interest on money borrowed to earn it | Capped at 20% of such income; no other deduction |
| Family pension (default regime, Sec 202(1)) | Standard deduction | 1/3 of pension or ₹25,000, whichever is lower |
| Family pension (other cases) | Standard deduction | 1/3 of pension or ₹15,000, whichever is lower |
| Letting of plant/machinery/furniture (± building) | Repairs, insurance, depreciation | Cross-referenced to business-income rules |
| Compensation on termination/modification (Sec 92(2)(i)) | Flat deduction | 50% of income; no other deduction |
| Commuted pension (Schedule VII fund) / death gratuity | Full amount | Entire amount deductible |
| Any other income | Expenditure wholly & exclusively to earn it | Must not be capital expenditure |
Related sections
Section 92 — Income from Other Sources (what is chargeable) Section 94 — Amounts not deductible from other sources Section 202 — Default (new) tax regime for individuals/HUF Section 19 — Deductions from salaries (incl. gratuity reference) Section 29 — Deductions for repairs, insurance of plant & machinery Section 57 (Act, 1961) — Old provision Section 93 replaces
Frequently asked questions
What is Section 93 of the Income-tax Act, 2025?
It lists the expenses you may deduct while computing income taxable under 'Income from Other Sources.' It is the 2025 Act's replacement for Section 57 of the 1961 Act.
How much family pension deduction can I claim?
You can claim one-third of the family pension or a monetary cap, whichever is lower. The cap is ₹25,000 under the default regime (Section 202(1)) and ₹15,000 in other cases.
Can I deduct interest on a loan taken to buy shares for dividend income?
Yes, but only up to 20% of the dividend (or mutual fund) income included in your total income. Any interest beyond that 20% is not deductible.
Are personal expenses deductible under Section 93?
No. Section 94 overrides Section 93 and specifically disallows personal expenses, so they can never be claimed against other-sources income.
Can I claim depreciation on machinery or furniture I have let out?
Yes. If letting of plant, machinery or furniture (with or without a building) is taxed under other sources, you may deduct repairs, insurance and depreciation on those assets.
Is capital expenditure allowed as a deduction here?
No. The general residual deduction covers only revenue expenditure incurred wholly and exclusively to earn the income; capital expenditure is excluded.
What is the 50% deduction under Section 93?
For certain compensation income referred to in Section 92(2)(i) (e.g. on termination or modification of employment terms), a flat 50% of the income is deductible and no other deduction is allowed against it.
C
CA Rajat Agrawal
Chartered Accountant, EaseValue · Reviewed 04 Jul 2026
This explainer is prepared and reviewed by EaseValue's tax team, based on the text of the Income-tax Act, 2025 (as amended by the Finance Act, 2026).
Disclaimer: This page explains the law in general terms for education and is not professional advice. The Income-tax Act, 2025 takes effect from 1 April 2026; provisions, thresholds and interpretations may change. Please confirm your specific position with our team before acting.
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