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Interest expenses to be recognized in case of loan becomes npa

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30 Points Posted on 08 August 2018
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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On 08 August 2018 at 11:36 Report
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Coaching and Practice in Tax Audit Law
4429 Points Posted on 08 August 2018

If loan is NPA then why will company pay interest to FI?

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On 08 August 2018 at 12:02
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Coaching and Practice in Tax Audit Law
4429 Points Posted on 08 August 2018

If loan is NPA then why will company pay interest to FI?

54 Reply
On 08 August 2018 at 12:03
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30 Points Posted on 08 August 2018
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.
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On 08 August 2018 at 12:23
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Coaching and Practice in Tax Audit Law
4429 Points Posted on 08 August 2018

You are talking from point of view of whom?

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On 08 August 2018 at 13:41
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30 Points Posted on 08 August 2018
Company point of view
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On 08 August 2018 at 14:10
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Consultant & Teacher(Whatsapp 8718057907
1306 Points Posted on 08 August 2018
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.
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On 08 August 2018 at 14:15
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Coaching and Practice in Tax Audit Law
4429 Points Posted on 08 August 2018

Exactly so there is no need of providing for interest

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On 08 August 2018 at 15:48
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30 Points Posted on 08 August 2018
Can we create a contingent liability for that?
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On 08 August 2018 at 16:06
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Consultant & Teacher(Whatsapp 8718057907
1306 Points Posted on 08 August 2018
it is not a contingent liability it is a liability.
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On 08 August 2018 at 16:14
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Coaching and Practice in Tax Audit Law
4429 Points Posted on 08 August 2018
Originally posted by : Prakash Gehani
it is not a contingent liability it is a liability.

Yes

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On 08 August 2018 at 16:16


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