Latest Expert Exchange Queries

GST Demo Service software link:
Username: demouser Password: demopass
Get your inventory and invoicing software GST Ready from Binarysoft
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
Popular Search: VAT RATES :: cpt :: list of goods taxed at 4% :: ARTICLES ON INPUT TAX CREDIT IN VAT :: articles on VAT and GST in India :: TDS :: form 3cd :: TAX RATES - GOODS TAXABLE @ 4% :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: due date for vat payment :: VAT Audit :: ACCOUNTING STANDARDS :: Central Excise rule to resale the machines to a new company :: empanelment :: ACCOUNTING STANDARD
News Headlines »
 Income tax returns (ITR) filing guide: 10 excellent tax-saving options other than Section 80C to save money
 TDS Rate Chart for AY 2018-19
 Last date to submit third installment of advance tax is December 15
 5 tax-saving funds that have given stellar returns in the past 5 years
 Find out which ITR Form is suitable for you
  Pr CIT vs. Baisetty Revathi (Andhra Pradesh High Court)
 What is income tax?
 Refund procedure initiated under GST
 Income tax returns (ITR) filing: How to get capital gains tax benefits on assets in own name
 7 avenues to help you save tax under Section 80C of Income Tax Act
 How to make income tax law less taxing

Banks want more tax rebate for NPA kitty
January, 25th 2008
Banks have sought higher income tax deduction, in sync with the higher provisioning they are required to make for non-performing assets (NPAs) due to more stringent guidelines prescribed by the Reserve Bank of India (RBI). The Income Tax Act does not take into account the additional provisioning banks make while complying with RBI guidelines.

Under the Income Tax Act, banks are allowed deduction on NPA provisioning, up to 7.5% of the total income. In addition, they get deduction up to 10% of the advances by their rural branches. Foreign banks get deduction up to 5% of total income. Following an amendment, an additional relaxation was introduced, which entails deduction up to 5% of total NPAs but this is not extended to foreign banks.

There is a considerable divergence between provisioning for NPAs under RBI guidelines and those admissible under the IT Act. Banks are willing to make provisions according to RBI guidelines. They should be eligible for appropriate deduction against additional provisioning. RBI guidelines are mandatory, and not advisory.

The RBI carries out inspections to ensure that NPAs of the banks are classified in accordance with its norms and provisioning is made according to the guidelines, a banker said. RBI guidelines are based on international best practices.

The Indian Banks Association has suggested that Income Tax Law may be amended so that the present provision for bad and doubtful debts available under section 36 (1) (viia) of the Income Tax Act may reflect the actual provisioning made according to the RBI guidelines. The provisions for NPAs under the I-T Act precede the relevant RBI guidelines.

There is a difference between income determined according to the tax laws and the books of accounts maintained under RBI guidelines. Therefore, the deduction available is different in both cases.

The government must look at harmonising the income tax law and the RBI guidelines. Given the buoyancy in tax collections, this proposal should be considered in the forthcoming budget, said PriceWaterhouseCoopers executive director Rahul Garg.

For example, if there is a large provisioning for a bad loan that exceeds 7.5% of the total income, the bank cannot claim the entire amount of provision for deduction if it exceeds 7.5% of the total income. If a bank sets aside Rs 100 as provisioning and has a total income of Rs 1,000, it can claim deduction up to Rs 75.

Further, in case of a settlement on the loan going forward, if the bank recovers the amount larger than the deduction allowed for income tax purposes, the amount of deduction which stands recovered would need to be offered as income, he said.
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Software Outsourcing Company Offshore Software Outsourcing Software Outsourcing Company India Offshore Outsourcing Company India Software BPO Software Business Process Outsourcing Software Outsourcing India Offsho

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions