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Waiver of interest on delayed payments in real estate sector

Others 253 views 1 replies

Punam

Accountant

37 Points Posted on 12 February 2016

Sir I am working in a real estate company. My company often waives off interest on delayed payments by the Plot/Flat buyers. Recently interest of an amount of more than 1 lakh was waived off. I wanted to ask is the interes t waiver ok. or are there any tax implications or other legal issues connected to it? can that be a problem for the company?

Replies (1)

mohammad rasool baig

Management Consultant

1026 Points Posted on 13 February 2016

From Taxation point of view, there will be no problem for the company as it is internal company policy and it is waived then there will be revenue for the company........

But the Companies act will get effected, As per AOA company needs to collect interest for the delay payments but the company acting ultravirus to the AOA, so make necessary modifications to the AOA as provide authority to the management to waive the interest in certain circumstances & please mention the list of circumstances.

From revenue point of view, company is effecting as construction companies needs high working capital & end up with paying large amount of interests, So it will be advisable to have proper & transperent Management policy for the interest waiver......