Amendment of section 36.
21. In section 36 of the Income-tax Act, in sub-section (1), in clause (viia), with effect from the 1st day of April, 2017,-
(i) after sub-clause (c) and before the Explanation, the following sub-clause shall be inserted, namely:-
“(d) a non-banking financial company, an amount not exceeding five per cent. of the total income (computed before making any deduction under this clause and Chapter VI-A).”;
(ii) in the Explanation, after clause (vi), the following clause shall be inserted, namely:-
‘(vii) “non-banking financial company” shall have the meaning assigned to it in clause (f) of section 45-I of the Reserve Bank of India Act, 1934 (2 of 1934.);’.
Notes on Clauses:
Clause 21 of the Bill seeks to amend section 36 of the Income tax Act relating to other deductions.
The existing provisions contained in clause (viia) of sub-section (1) of the aforesaid section provide for deduction in respect of any provision for bad and doubtful debts made by certain entities.
It is proposed to insert a new sub-clause (d) in clause (viia) of sub-section (1) of the aforesaid section so as to provide that any provision for bad and doubtful debts made by a non-banking financial company shall be allowed a deduction of an amount not exceeding five per cent. of the total income (computed before making any deduction under this clause and Chapter VI-A).
It is also proposed to define the expression “non-banking financial company”.
These amendments will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017- 2018 and subsequent years.