Income Tax Ordinance, 2001 — Section 29A: Provision regarding consumer loans

1[29A. Provision regarding consumer loans.— (1) A 2[ ] 3[non-banking finance company or the House Building Finance Corporation] shall be allowed a deduction, not exceeding three per cent of the income for the tax year, arising out of consumer loans for creation of a reserve to off-set bad debts arising out of such loans.

(2)Where bad debt cannot be wholly set off against reserve, any amount of bad debt, exceeding the reserves shall be carried forward for adjustment against the reserve for the following years.] 4[Explanation.— In this section, “consumer loan” means a loan of money or its equivalent made by 5[ ] a non-banking finance company or the House Building Finance Corporation to a debtor (consumer) and the loan is entered primarily for personal, family or household purposes and includes debts created by the use of a lender credit card or similar arrangement as well as insurance premium financing.] 30. Profit on non-performing debts of a banking company or development finance institution.—(1) A banking company or development finance institution 6[or Non-Banking Finance Company (NBFC) or modaraba] shall be allowed a deduction for any profit accruing on a non-performing debt of the banking company or institution 7[or Non-Banking Finance Company (NBFC) or modaraba] where the profit is credited to a suspense account in accordance with the Prudential Regulations for Banks or 8[Non Banking Finance Company or modaraba] Non-bank Financial Institutions, as the case may be, issued by the State Bank of Pakistan 9[or the Securities and Exchange Commission of Pakistan].

(2)Any profit deducted under sub-section (1) that is subsequently recovered by the banking company or development finance institution 10[or Non Banking Finance Company (NBFC) or modaraba] shall be included in the income Chapter III – Tax on Taxable Income of the company or institution 1[or Non-Banking Finance Company (NBFC) or modaraba] chargeable under the head “Income from Business” for the tax year in which it is recovered.