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of <h1>Interest Deductions u/s 43B: Only Actual Payments Count, Not Conversions or Waivers.</h1> The circular clarifies the deduction of interest under section 43B of the Income-tax Act, 1961, as amended by the Finance Act, 2006. It explains that interest payable on loans or borrowings is deductible only when actually paid, not when converted into a loan or advance. Various examples illustrate scenarios where interest is converted into a Funded Interest Term Loan (FITL) and the conditions under which deductions are permissible. The document emphasizes that only actual payments qualify for deductions, and any waiver of interest does not. Assessing Officers may require certification of actual interest payments from financial institutions.
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