Sections 94 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 94 lists amounts that cannot be deducted when computing income under the head "Income from other sources", and brings in several business-income sections for that head. Section 95 applies the provisions of section 38 to income under section 92. This article reads both as per the Income-tax Act, 2025 as amended by the Finance Act, 2026; later amendments, rules and notifications should be checked. If you have such income to report, our income tax return filing service can help you compute it.
Irrespective of section 93, personal expenses, interest payable outside India on which tax has not been paid or deducted under Chapter XIX-B, and salary payable outside India (unless tax has been paid or deducted under Chapter XIX-B) are not deductible from income from other sources (section 94(1)). Sections 29, 35(b)(i) and 36 apply as they do to business income (section 94(2)); a foreign company also gets section 59 (section 94(3)). Section 95 applies section 38(1) to (4) to income under section 92.
Where these sections sit
Section 92 charges "Income from other sources" and lists specific receipts such as dividend, winnings, certain insurance sums and sums received without consideration; our note on section 92 explains it. Section 93 lists the deductions allowed in computing that income; see section 93. Sections 94 and 95 then restrict and supplement those deductions.
Section 94(1): the three amounts that cannot be deducted
Irrespective of anything in section 93, the following amounts are not deductible in computing the income of any assessee chargeable under "Income from other sources":
| Clause | Amount not deductible |
|---|---|
| (a) | Any personal expenses of the assessee |
| (b) | Any interest chargeable under the Act, payable outside India, on which tax has not been paid or deducted under Chapter XIX-B |
| (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 |
Clause (a) has no qualification: personal expenses are barred whatever the circumstances. Clauses (b) and (c) are conditional on tax having been paid or deducted under Chapter XIX-B, which covers deduction and collection at source. For clause (c), if the tax has been paid or deducted, the bar does not apply.
Example (invented). Anil's income from other sources includes interest on a deposit. He pays a household electricity bill, which is a personal expense: not deductible under section 94(1)(a). He also pays interest of Rs. 40,000 to a lender outside India in connection with money borrowed to earn that interest, and neither pays nor deducts tax on it under Chapter XIX-B. Under section 94(1)(b) the Rs. 40,000 is not deductible. If tax had been paid or deducted under that Chapter, the clause would not bar it (section 93(1)(e) and its tests would then apply). The amounts are assumed for the illustration.
Section 94(2): business-income provisions that apply
The provisions of sections 29, 35(b)(i) and 36 apply in computing income chargeable under "Income from other sources" as they apply in computing income under "Profits and gains of business or profession". The text of section 94 does not describe what those provisions allow or bar; for section 29 see our note on section 29. The reader should read the cited sections themselves.
Section 94(3): foreign companies and section 59
For an assessee that is a foreign company, section 59 applies in computing "Income from other sources" as it applies to business income. Section 59 deals with royalty and fees for technical services received by a specified assessee through a permanent establishment or fixed place of profession in India. See our article on sections 59 and 60 for what it provides. Section 94(3) applies it by reference; whether any particular receipt of a foreign company falls within section 59 depends on that section's conditions.
Section 95: section 38 applies to income under section 92
Section 95 says that section 38(1), (2), (3) and (4) apply in computing the income of an assessee under section 92 as they apply in computing income under "Profits and gains of business or profession". The section is a single sentence and is headed "Profits chargeable to tax". What section 38 provides is explained in our note on section 38. Note that section 95 refers to section 92 as a whole, while section 94(2) and (3) refer to the computation of income chargeable under the head.
Table of cross-applied sections
| Provision | What it applies to income from other sources |
|---|---|
| Section 94(2) | Sections 29, 35(b)(i) and 36, as for business income |
| Section 94(3) | Section 59, for a foreign company |
| Section 95 | Section 38(1), (2), (3) and (4) |
Printing point to note
In the consolidated copy, a footnote marked "10c" is printed after section 94(3). It records a substitution by the Finance Act, 2026 of section 93(2), which sits on the same page earlier, and not of any part of section 94. It should not be read as an amendment of section 94. Section 94 itself carries no Finance Act, 2026 marking in the lines read.
Practical checklist
- Separate personal from business-type expenses before claiming anything against income from other sources.
- For interest or salary payable outside India, check whether tax was paid or deducted under Chapter XIX-B before claiming a deduction.
- Check sections 29, 35(b)(i) and 36 for any additional allowance or restriction.
- If the assessee is a foreign company, read section 59.
- Read section 38(1) to (4) for the rules section 95 imports.
Need help with income from other sources?
Interest, dividends, gifts and other receipts under section 92 need careful treatment of what can be deducted. Our income tax return filing team can help you apply sections 93 to 95 to your return.
Key takeaways
- Personal expenses are never deductible against income from other sources.
- Interest and salary payable outside India are deductible only if tax has been paid or deducted under Chapter XIX-B.
- Sections 29, 35(b)(i) and 36 apply to this head as to business income.
- A foreign company also gets section 59.
- Section 95 applies section 38(1) to (4) to income under section 92.
Read next
- Sections 96–98: transfer of income and revocable transfers
- Sections 87–89: shifting of industrial undertaking and extension of time
- Section 92: income from other sources
- Section 93: deductions from other sources
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.