Page 16 - Union Budget_2019

Union Budget 2019

PROFITS AND GAINS OF BUSINESS OR PROFESSION

2.1 Incentives to Non-Banking Finance Companies (NBFCs)

As per Section 43D, receipt of interest income from bad and doubtful debts by certain entities shall be

charged to tax in the previous year in in which it is actually received.

Currently the benefits of the above provision are available only to

• public financial institutions,
• scheduled banks,

• cooperative banks,
• State financial corporations,

• State industrial investment corporations and
• public companies like housing finance companies

With a view to extend the above benefit to certain categories of NBFCs, it is proposed to amend Section 43D
so as to include the following companies to tax the interest income from bad and doubtful debts o on receipt

basis.

• Deposit taking NBFCs and

• Systemically important non deposit taking NBFC’s.

Consequentially, it is further proposed to amend 43B, to provide that interest paid on loans taken on loans
and advances from a deposit taking NBFCs and systemically important non deposit taking NBFC 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. Once this deduction is allowed under said Section 43B, the assessee shall not be

entitled for deduction under any other section for the said sum in computing the income of the previous
year in which such sum is actually paid.

Further, deduction shall be allowed only if interest is actually paid and not if it is converted into a loan or

borrowing.

"Deposit taking NBFC" means a non-banking financial company which is accepting or holding public

deposits and is registered with the Reserve Bank of India under the provisions of the Reserve Bank of India
Act, 1934

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