| Question And Answer | |
|---|---|
| Subject: | What would be taxability on waiver of loans in light of section 2(24)(viii). What will be taxability in case a private limited company waives its loan given to another private limited company. Will it be taxable u/s 56(2)(x) ? |
| Category: | Income-Tax |
| Querist: | Priyansh |
| Answered by: | Advocate Aditya Ajgonkar |
| Tags: | income from other sources, Loan waiver, waiver of loan |
| Date: | May 15, 2021 |
what would be taxability on waiver of loans in light of section 2(24)(viii). What will be taxability in case a private limited company waives its loan given to another private limited company. Will it be taxable u/s 56(2)(x)
The taxability of the wavier of loans in the case of a private limited company waiving a loan given to another private company with regards to Section 56(2)(x) would be based upon the commercial and other terms in the agreement for the loan given. Section 56(x)(a) is applicable when a person receives money without consideration. Commercial loans are given with an interest element and therefore are not ‘without consideration’. Section 2(24)(viii) has been omitted by the Finance Act, 1988. As this question has been answered for educational purposes,
you are requested to obtain proper legal advice based upon the facts and circumstances of your case by a tax professional of your choice.