Latest Expert Exchange Queries
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) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: VAT RATES :: empanelment :: form 3cd :: ACCOUNTING STANDARD :: ACCOUNTING STANDARDS :: list of goods taxed at 4% :: VAT Audit :: TAX RATES - GOODS TAXABLE @ 4% :: due date for vat payment :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: Central Excise rule to resale the machines to a new company :: cpt :: TDS :: articles on VAT and GST in India :: ARTICLES ON INPUT TAX CREDIT IN VAT
 
 
News Headlines »
 How to claim income tax refund
 How to time your buys to have best of two tax regimes
 Here's why you must always check Form 26AS before filing tax return
 Want to file your income tax return after June 30? Having Aadhaar card is a must
 Timeline for filing of tax returns extended by two months
 Top 5 common mistakes to avoid while filing your income tax returns
 GST rollout on July 1: Deadline for filing tax returns extended
 What is GST?
 Income-tax (15th Amendment) Rules, 2017?
 Banks get a breather as GST Council extends deadline for tax filing
 Income Tax filing: Your easy guide in 7 steps

NBFCs seek I-T benefits on bad loan provision
February, 27th 2008
Asset financing non-banking finance companies (NBFCs) have asked the finance ministry to extend income tax benefits to them from provision against non-performing assets (NPAs).
 
Under the existing terms of the IT Act u/s 36(1)(viia), a provision for bad and doubtful debts by banks and financial institutions is allowed as a deduction to the extent of 7.5 per cent from the gross total income.
 
Alternatively, such banks and FIs have been given an option to claim a deduction with respect to any provision made for assets classified by the Reserve Bank of India as doubtful assets or loss of assets to the extent of 10 per cent (increased from 5 per cent) of such assets.
 
Though NBFC-AFCs are required to make provisions for NPAs, such provisions are disallowed by tax authorities when assessing their income tax liabilities.
 
These provisions made against NPAs are in the nature of business expenses incurred wholly and exclusively for business operations by an NBFC-AFC and therefore, these provisions should be allowed to be deducted while arriving at the taxable profits of NBFC-AFCs. Any recovery made against these allowed provisions would automatically get taxed later on, said the pre-budget memorandam from the NBFC sector.
 
On the indirect tax front, the sector has asked for exempting the total interest component in a lease/hire-purchase transaction from the levy of service tax so that only the management fee/processing charges are subject to the levy, as in the case of a loan transaction.
 
In 2006, the finance ministry had exempted 90 per cent of the interest component in a lease/hire-purchase transaction from service tax, while 10 per cent of the finance charges/interest component is still subject to service tax.
 
The sector has argued that the levy of service tax at 12.24 per cent even on the 10 per cent of interest component makes lease/hire-purchase costlier to the borrower and so economically unfavourable compared to a loan transaction, where 100 per cent of the interest component is exempted from service tax.
 
NBFC-AFCs have also asked for extending to them the SARFAESI Act and Debt Recovery Tribunals. Currently, banks, financial institutions, housing finance companies have been notified under the SARFAESI Act, giving them the ability to move against defaulting borrowers and secure their assets. AFCs are the only segment of the financial sector that have not been notified under the Act.
 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Achievements

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