Taxability of Loan Waivers: Amount not taxable on receipt changes colour when it becomes assessee’s own money

Taxability of Loan Waivers: Amount not taxable on receipt changes colour when it becomes assessee’s own money https://www.taxtmi.com/article/detailed?id=11627 Loan waivers are characterised by whether the waived amounts are revenue receipts or capital receipts, based on the loan's original purpose and prior accounting treatment. Interest charged to profit and loss is taxable when waived; interest capitalised into an asset and written off on waiver is a capital receipt. Principal waived is revenue if borrowed for working capital or day to day operations, and capital if borrowed for acquisition or expansion of capital assets. Statutory definitions and withholding clarifications do not override this purpose based test. en-us Wed, 19 Jul 2023 09:08:08 +0530 Wed, 19 Jul 2023 09:08:08 +0530 TaxTMI RSS Generator Taxability of Loan Waivers: Amount not taxable on receipt changes colour when it becomes assessee’s own money https://www.taxtmi.com/article/detailed?id=11627 Loan waivers are characterised by whether the waived amounts are revenue receipts or capital receipts, based on the loan's original purpose and prior accounting treatment. Interest charged to profit and loss is taxable when waived; interest capitalised into an asset and written off on waiver is a capital receipt. Principal waived is revenue if borrowed for working capital or day to day operations, and capital if borrowed for acquisition or expansion of capital assets. Statutory definitions and withholding clarifications do not override this purpose based test. Articles Income Tax Wed, 19 Jul 2023 09:08:08 +0530 https://www.taxtmi.com/article/detailed?id=11627