Union Budget 2017 - 18 - Extension of scope of section 43D to Co-operative
Banks
The existing provisions of section 43D of the
Act, inter-alia, provides that interest income in relation to certain
categories of bad or doubtful debts received by certain institutions or banks
or corporations or companies, shall be chargeable to tax in the previous year
in which it is credited to its profit and loss account for that year or
actually received, whichever is earlier.
This provision is an exception to the
accrual system of accounting which is regularly followed by such assessees for
computation of total income. The benefit of this provision is presently
available to scheduled banks, public financial institutions, State financial
corporations, State industrial investment corporations and certain public
companies like Housing Finance companies.
W ith a view to provide a level
playing field to co-operative banks vis-Ã -vis scheduled banks and to
rationalise the scope of the section 43D, it is proposed to amend section 43D
of the Act so as to include co-operative banks other than a primary
agricultural credit society or a primary co-operative agricultural and rural
development bank.
Consequentially , as per matching principle in
taxation, if the interest income on bad or doubtful debts is chargeable to tax
on receipt basis, the interest payable on such bad or doubtful debts need to be
allowed on actual payment.
In view of this, it is proposed to amend section 43B
of the Act to provide that any sum payable by the assessee as interest on any
loan or advances from a co-operative bank other than a primary agricultural
credit society or a primary co-operative agricultural and rural development
bank shall be allowed as deduction if it is actually paid on or before the due
date of furnishing the return of income of the relevant previous year.
These amendments will take effect from 1st April,
2018 and will, accordingly, apply in relation to the assessment year 2018-19
and subsequent years.
No comments:
Post a Comment