What is the crux of judgement of Vasisth Chay Vyapar Ltd?
What is the crux of judgement of Vasisth Chay Vyapar Ltd?
Kanishka Jan. 31, 2018
The apex court ruling is a big relief for all NBFC's as well as banking companies....Once the borrower becomes NPA, there arises doubt regarding recovery of principle amount...In such scenario, levying tax on accrued interest on such NPA account totally becomes irrelevant.
Thus interest on NPA accounts will be taxable on receipt basis and not on accrual basis.
Further due to rising NPA's bank faces lower capital adequacy ratio...In such a framework, demanding of tax on such interest whose chances of recovery are precious little, is draconian in nature.
