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Clause - 018 - Amendment of section 43D.
Clause 18 of the Bill seeks to amend section 43D of the Income-tax Act relating to special provision in case of income of public financial institutions, public companies, etc.
The said section inter alia, provides that interest income in relation to certain categories of bad or doubtful debts received by certain institutions or banks or corporations or companies, as referred to in the Explanation to the said section, shall be chargeable to tax in the previous year in which it is credited to its profit and loss account for that year or actually received, whichever is earlier.
It is proposed to amend the said section so as to provide that the interest income in relation to certain categories of bad or doubtful debts received by a co-operative bank other than a primary agricultural credit society or a primary cooperative agricultural and rural development bank shall also be chargeable to tax in the previous year in which it is credited to its profit and loss account for that year or actually received, whichever is earlier.
It is further proposed to include the definitions of the expressions "co-operative bank", "primary agricultural credit society" and "primary co-operative agricultural and rural development bank" in the said section.
These amendments will take effect from 1st April, 2018 and will, accordingly, apply in relation to the assessment year 2018-2019 and subsequent years.
Interest income recognition on bad debts: cooperative banks aligned with accrual-or-receipt tax treatment for recovered interest. Amendment extends the rule that interest on certain bad or doubtful debts is taxable in the year it is credited to profit and loss or actually received, whichever is earlier, to co-operative banks while excluding primary agricultural credit societies and primary co-operative agricultural and rural development banks; it also adds in-section definitions of those terms and specifies a prospective operative date applying to the indicated assessment year and subsequent years.
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