Section 94 is the substantive equivalent of 1961 s. 58 . It overlays the s. 93 deduction framework with prohibited / non-deductible items: (a) personal expenses; (b) interest / salary paid OUTSIDE India without TDS or to NR-payee for whom…
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ITA 2025 · Section 94
Section 94 — AMOUNTS NOT DEDUCTIBLE (OTHER SOURCES OVERLAY)
Section 94 is the substantive equivalent of 1961 s. 58. It overlays the s. 93 deduction framework with prohibited / non-deductible items: (a) personal expenses; (b) interest / salary paid OUTSIDE India without TDS or to NR-payee for whom TDS not deducted; (c) wealth-tax (from any year); (d) cash payments above ₹ 10,000 (s. 36 PGBP analogue applied to OS); (e) lottery / gambling expenditure (no deductions allowed against winnings — flat-rate tax); (f) any other amount expressly disallowed under the Act.
STATUTORY ARCHITECTURE
Section 94 is the OS-head version of disallowance provisions. It mirrors PGBP-side s. 36 disallowances. Most consequential: (a) LOTTERY / GAMBLING — NO deduction whatsoever (flat 30% on gross receipts); even basic-exemption-set-off denied. (b) Cash > ₹ 10,000 — extends the cash-economy crackdown to OS deductions (interest paid by cash > ₹ 10,000 disallowed). (c) NR-payee TDS-default — interest / salary paid outside India without TDS = full disallowance, deductible only on subsequent payment of TDS.
PLANNING NOTES
(i) For lottery / horse-race / gambling winnings, do NOT attempt to net against losses — flat 30% on gross receipts is unavoidable. (ii) For interest paid abroad on borrowings used for share-investment (s. 93(b) deductible), ensure TDS u/s 192 (1961 s. 195) is deducted; failure triggers s. 94 disallowance. (iii) Avoid cash payments > ₹ 10,000 for any OS-deductible expenditure — use banking channels. (iv) Wealth-tax (legacy obligations under 1957 Wealth-tax Act) — never deductible from any head.
CROSS-REFERENCES