Section 91 - Amendment of section 2 - Finance (No. 2) Act, 1991

Interest-tax 91. Amendment of section 2. In the Interest-tax Act, 1974 (45 of 1974) (hereinafter referred to as the Interest-tax Act), in section 2, with effect from the 1st day of October, 1991, (a) after clause (5), the following clauses shall be inserted, namely: (5A) credit institution means, (i) a banking company to which the Banking Regulation Act, 1949 (10 of 1949), applies (including any bank or banking institution referred to in section 51 of that Act) or a co-operative society engaged in carrying on the business of banking not being a co-operative society providing credit facilities to farmers ox village artisans; (ii) a public financial institution as defined in section 4A of the Companies Act, 1956 (1 of 1956); (iii) a State financial corporation established under section 3 or section 3A or an institution notified under section 46 of the State Financial Corporations Act, 1951 (63 of 1951). and (iv) any other financial company; (5B) financial company means a company, other than a company referred to in sub-clause (i), (ii) or (iii) of clause (5A), being (i) a hire-purchase finance company, that is to say, a company which carries on, as its principal business, hire-purchase transactions or the financing of such transactions; (ii) an investment company, that is to say, a company which carries on, as its principal business, the acquisition of shares, stock, bonds, debentures, debenture stock or securities issued by the Government or a local authority, or other marketable securities of a like nature; (iii) a housing finance company, that is to say, a Company which carries on, as its principal business, the business of financing of acquisition or construction of houses, including acquisition or development of land in connection therewith; (iv) a loan company, that is to say, a company [not being a company referred to in sub-clauses (i) to (iii)] which carries on, as its principal business, the business of providing finance, whether by making loans or advances or otherwise; (v) a mutual benefit finance company, that 13 to say, a company which carries on, as its principal business, the business of acceptance of deposits from its members and which is declared by the Central Government under section 620A of the Companies Act, 1956 (1 of 1956), to be a Nidhi or Mutual Benefit Society; or (vi) a miscellaneous finance company, that is to say, a company which carries on exclusively, or almost exclusively, two or more classes of business referred to in the preceding sub-clauses; ; (b) for clause (7), the following clause shall be substituted, namely:- (7) interest means interest on loans and advances- made in India and includes (a) commitment charges on unutilised portion of any credit sanctioned for being availed of in India; and (b) discount on promissory notes and bills of exchange drawn or made in India, but does not include (i) interest referred to in sub-section (1B) of section 42 of the Reserve Bank of India Act, 1934 (2 of 1934); (ii) discount on treasury bills; ; (c) clause (9) shall be omitted.