Dear Friends
If I take a loan for a trading activity and the bank waives off the loan amount, the same becomes my Income and is taxable.
However, waiver of Term loan taken for acquiring Fixed assets is not Income.
I don't understand the logic behind this. Please explain in simple words.
Regards
@ Ritzz
The logic behind it is very simple.The waiver, since it is related to Fixed Asset, It is treated as a Capital Receipt not chargable to tax.The same happens in the case of a subsidy received for Acquisition of Fixed Assets and is not treated as part of your income.
But conversion of interest due on term loan to another term loan is surely taxable in your hands!
Cheerio!
| Originally posted by : Piyush Jhawar | ||
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@ Ritzz The logic behind it is very simple.The waiver, since it is related to Fixed Asset, It is treated as a Capital Receipt not chargable to tax.The same happens in the case of a subsidy received for Acquisition of Fixed Assets and is not treated as part of your income. But conversion of interest due on term loan to another term loan is surely taxable in your hands! Cheerio! |
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