Special provision in case of interest income of specified financial institutions
[As per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
Section 56(1) of Income Tax Act 2025
56(1) Irrespective of anything to the contrary contained in this Act, the interest income in relation to bad or doubtful debts of a specified financial institution shall be chargeable to tax under the head “Profits and gains of business or profession” in the tax year in which such interest is—
- (a) credited to the profit and loss account; or
- (b) actually received,
whichever is earlier.
Section 56(2) of Income Tax Act 2025
56(2) In this section,––
- 56(2)(a) “specified financial institution” means––
- (i) a public financial institution; or
- (ii) a scheduled bank; or
- (iii) a co-operative bank, other than––
- (A) a primary agricultural credit society; or
- (B) a primary co-operative agricultural and rural development bank; or
- (iv) a State Financial Corporation; or
- (v) a State Industrial Investment Corporation; or
- (vi) any such class of non-banking financial companies, as notified by the Central Government;
- 56(2)(b) “bad or doubtful debts” shall be such categories of debts, as prescribed, having regard to the guidelines issued in relation to such debts by the Reserve Bank of India.
