Hi
If a loan becomes npa then do that company recognize interest as expenses on that loan even if the financial institution is not charging as per RBI circular.
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Interest expenses to be recognized in case of loan becomes npa
Replies (10)
If loan is NPA then why will company pay interest to FI?
If loan is NPA then why will company pay interest to FI?
As the company don't know the resolution plan how the FI will proceed further before the end of the Balance sheet, in this scenario do we need to create a provision or contingent liability.
You are talking from point of view of whom?
Company point of view
I think company should make provision as company cant restrain itself from its obligation to pay interest even if loan is classified as NPA.
But as per incometax act it will be dissallowed u/s 43B if not paid on or before due date of filing the return.
But as per incometax act it will be dissallowed u/s 43B if not paid on or before due date of filing the return.
Exactly so there is no need of providing for interest
Can we create a contingent liability for that?
it is not a contingent liability it is a liability.
| Originally posted by : Prakash Gehani | ||
 |
it is not a contingent liability it is a liability. |  |
Yes
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