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Ecb query

Tax queries 304 views 1 replies

Hi,

I have query regarding ECB. ECB is unpaid in books for over 10 years. The company in discussion with the party decided to pay back 30% of the amount. My query is regarding treatment of the balance 70% in books and its tax implications.

Thank You.

Replies (1)

ECB ie External Commercial Borrowing.

Principal Amount borrowed in Neither an Income nor an Expense.

Amount when borrowed is a Liability in the hands of the borowwer , Hence Loan  w/off should be a Capital receipt.

Tax Treatment: 70% Not Taxable being a Capital receipt 

30% of Principal Amount paid by the company : Not an Expense.

 

Kinldy Rectify If i have said anything wrong. The above Answer is my Opinion on the Question placed in the forum. Expert opinion should be taken and tallied with.


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