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Interest expenses to be recognized in case of loan becomes npa

VENKAT RAO ( ) (30 Points)

08 August 2018

Hi

If a loan becomes npa then do that company recognize interest as expenses on that loan even if the financial institution is not charging as per RBI circular.

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10 Replies

Ruchika Somani (Coaching and Practice in Tax Audit Law.) (4429 Points)
Replied 08 August 2018

If loan is NPA then why will company pay interest to FI?

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Ruchika Somani (Coaching and Practice in Tax Audit Law.) (4429 Points)
Replied 08 August 2018

If loan is NPA then why will company pay interest to FI?

VENKAT RAO ( ) (30 Points)
Replied 08 August 2018

As the company don't know the resolution plan how the FI will proceed further before the end of the Balance sheet, in this scenario do we need to create a provision or contingent liability.

Ruchika Somani (Coaching and Practice in Tax Audit Law.) (4429 Points)
Replied 08 August 2018

You are talking from point of view of whom?

VENKAT RAO ( ) (30 Points)
Replied 08 August 2018

Company point of view

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Prakash Gehani (Consultant & Teacher(Whatsapp 8718057907)) (1306 Points)
Replied 08 August 2018

I think company should make provision as company cant restrain itself from its obligation to pay interest even if loan is classified as NPA.

But as per incometax act it will be dissallowed u/s 43B if not paid on or before due date of filing the return.

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