Expenditures on non-performing debts under tax law

Expenditures on non-performing debts under tax law

Section 30 of Income Tax Ordinance, 2001 has allowed profit on non-performing debts with certain conditions.

The Federal Board of Revenue (FBR) issued the Income Tax Ordinance, 2001 updated up to June 30, 2021. The Ordinance incorporated amendments brought through Finance Act, 2021.

30. Profit on non-performing debts of a banking company or development finance institution.—(1) A banking company or development finance institution or Non-Banking Finance Company (NBFC) or modaraba shall be allowed a deduction for any profit accruing on a non-performing debt of the banking company or institution or Non-Banking Finance Company (NBFC) or modaraba where the profit is credited to a suspense account in accordance with the Prudential Regulations for Banks or Non-Banking Finance Company or modaraba Non-bank Financial Institutions, as the case may be, issued by the State Bank of Pakistan or the Securities and Exchange Commission of Pakistan.

(2) Any profit deducted under sub-section (1) that is subsequently recovered by the banking company or development finance institution or Non-Banking Finance Company (NBFC) or modaraba shall be included in the income of the company or institution or Non-Banking Finance Company (NBFC) or modaraba chargeable under the head “Income from Business” for the tax year in which it is recovered.

(Disclaimer: The text of above section is only for information. Team PkRevenue.com makes all efforts to provide the correct version of the text. However, the team PkRevenue.com is not responsible for any error or omission.)

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