Provision
Querist :
Anonymous
(Querist) 11 July 2010
This query is : Resolved
Dear Sir,
Kindly clarify, if NBFC makes provison as per RBI prudencial norms,for sub standard assets and NPA, is these provsion is allowed as per Income Tax act? Is this be grouped under the section 36 of Income tax act.
Thanks
regards
Kalyan
Vineet
(Expert) 12 July 2010
Provision for Bad and doubtful assets made by domestic scheduled or non-scheduled bank, Co-operative Bank, Primary Co-operative agricultural and Rural Development Bank, Foreign Bank, Public Financial Institutions, State Financial Corporations is allowed as deduction u/s 36(1)(viia)subject to limits prescrived under relevant sub-clauses. Such alloawbale deduction is adjusted against actual bad debt written off as and when such write off is claimed as deduction.
However, no such deduction is allowable for NBFCs in whose case deduction is allowable on actual write off u/s 36(1)(vii).
What do you actually mean by "Grouped u/s 36 of Income Tax Act".
soumitra basu
(Expert) 01 August 2010
As per latest decision of the Supreme Court provision for bad debt is an allowable deduction in the hand of NBFC
