Section 93 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 93 lists what can be deducted in computing income under the head "Income from other sources", from banker's commission on interest on securities to the family pension deduction. This explanation is as per the Income-tax Act, 2025 as amended by the Finance Act, 2026, which changed clause (a) and sub-section (2) of this section with effect from 1 April 2026.
Section 93(1) allows eight kinds of deduction against other-sources income. Family pension gets the lower of one-third of the income or Rs. 25,000 where tax is computed under section 202(1), and the lower of one-third or Rs. 15,000 otherwise. Interest received on compensation gets 50% and no other deduction. Commuted pension from the fund in Schedule VII and gratuity received on death are deducted in full. Under section 93(2), no deduction is allowed against dividend income or income from the specified mutual fund and UTI units. Later amendments, rules and notifications should be checked.
How section 93 relates to section 92
Section 92 charges income of every kind not excluded from total income and not chargeable under another head, and lists in sub-section (2) the incomes that are chargeable in particular. Section 93 then says what may be deducted, and section 94 says what may not. Your figures from this head feed into income tax return filing alongside your other heads.
Section 93(1): the deductions
| Clause | Income | Deduction |
|---|---|---|
| (a) | 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) | Income of the nature referred to in section 92(2)(c) (sums received from employees as contributions to a provident fund, superannuation fund, ESI fund or other welfare fund, if not chargeable under business or profession) | So far as may be, an amount as per section 29(1)(e) |
| (c) | Income of the nature referred to in section 92(2)(f) and (g) (letting on hire of machinery, plant or furniture, with inseparable buildings) | So far as may be, an amount as per section 28(1)(a), (b), (d), section 33, and subject to section 28(2) |
| (d) | Family pension (a regular monthly amount payable by the employer to a family member of an employee upon the death of the employee) | (i) one-third of the income or Rs. 25,000, whichever is less, where income-tax is computed under section 202(1); (ii) one-third of the income or Rs. 15,000, whichever is less, in any other case |
| (e) | Any other expenditure (not capital expenditure) | Laid out or expended wholly and exclusively for making or earning such income |
| (f) | Income of the nature referred to in section 92(2)(i) (interest on compensation or enhanced compensation under section 278(1)) | 50% of such income, and no other deduction under this section |
| (g) | Commutation of pension received from a fund specified in Schedule VII (serial number 3) | The entire amount |
| (h) | Gratuity as referred to in section 19(2)(g), received on the death of the employee | The entire amount |
Clause (a) was substituted by the Finance Act, 2026, w.e.f. 1-4-2026. As printed now, it speaks only of interest on securities; the earlier wording also named dividends. Clause (b) borrows the amount allowed under section 29(1)(e), explained in our article on section 29. Clause (c) borrows rules from section 28 (explained with sections 27 and 30) and section 33 on depreciation.
Section 93(2): no deduction for dividends and certain units
Section 93(2) was substituted by the Finance Act, 2026, w.e.f. 1-4-2026. As it stands, irrespective of anything in sub-section (1), in respect of any dividend income, or income from units of a Mutual Fund specified under Schedule VII (serial number 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. Before the substitution, the sub-section had allowed an interest-expense deduction in some of those cases; it now allows none. Check the 2002 Act for its own meaning of the specified company.
So even a clause (e) expenditure claim ("wholly and exclusively") is not available against these incomes. That is the main practical change for investors who borrowed to invest.
Family pension in more detail
Family pension means a regular monthly amount payable by the employer to a family member of an employee upon the death of that employee. The deduction has two tracks:
| Tax computed under | Deduction |
|---|---|
| Section 202(1) | Lower of one-third of the income or Rs. 25,000 |
| Any other case | Lower of one-third of the income or Rs. 15,000 |
For section 202, see our article on the new tax regime in section 202. The text at section 93(1)(d) does not give a separate definition of which family member qualifies beyond "a family member".
Worked example
The names and amounts are assumed. Dev's mother receives family pension of Rs. 90,000 in the tax year.
- One-third of Rs. 90,000 = Rs. 30,000.
- If her tax is computed under section 202(1): lower of Rs. 30,000 and Rs. 25,000 = Rs. 25,000, so income after deduction = Rs. 65,000.
- If her tax is computed in any other case: lower of Rs. 30,000 and Rs. 15,000 = Rs. 15,000, so income after deduction = Rs. 75,000.
Interest on compensation, for instance Rs. 2,00,000 received under section 278(1), gets 50% as deduction under clause (f): Rs. 1,00,000, leaving Rs. 1,00,000 chargeable, and no other deduction under section 93 is allowed against that interest.
For interest on securities of Rs. 80,000, if the banker is paid Rs. 2,000 as commission for realising it, and the sum is reasonable, Rs. 2,000 is deductible under clause (a), leaving Rs. 78,000.
Common mistakes
- Claiming interest paid on a loan against dividend income. Section 93(2) allows no deduction.
- Claiming the Rs. 25,000 limit when tax is not computed under section 202(1). The lower Rs. 15,000 applies then.
- Claiming expenses against interest on compensation. Clause (f) allows only 50% and no other deduction.
- Treating commission paid to realise dividend as deductible; clause (a) now refers to interest on securities.
Need help?
If you hold pension, dividends, units or compensation interest, we can check which clause applies before you file. See our tax planning advisory and income tax return filing services.
Key takeaways
- Section 93 is a closed list of deductions plus the "wholly and exclusively" clause.
- Family pension: one-third, capped at Rs. 25,000 under section 202(1) and Rs. 15,000 otherwise.
- Interest on compensation: 50% only.
- Commuted pension from the specified fund and gratuity on death: entire amount.
- No deduction against dividends and the specified units (section 93(2), substituted w.e.f. 1-4-2026).
Read next
- Section 92: income from other sources
- Sections 94 and 95: amounts not deductible
- Section 202: the new tax regime
- Section 29: employee welfare deductions
- Section 33: depreciation
- Chapter IV: computation of total income
Disclaimer: Based on the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026, as consulted on 2 October 2026. It explains the words of the Act only; the Income-tax Rules, 2026, notifications, circulars, later amendments and the way the tax authorities and courts apply these provisions should be checked. This article is general information, not legal advice; check the official text before acting.