Special limits on allowance of interest under Section 53(ITA-2023)

Special limits on allowance of interest under Section 53 | Bangladesh Income Tax Act -2023

As per section-53(ITA-2023),

Special limits on deductibility of interest:-(1) Notwithstanding any other provision of this Act, and subject to sub-section (2), interest paid in any assessment year by a resident—other than a bank or a finance company—to an associated enterprise as defined in section 233 shall be allowed as a deductible expense only in accordance with the procedures and limits prescribed by the Board.

(2) This section shall not apply where the total amount of interest paid in an income year does not exceed Taka 15 (fifteen) lakh.

Frequently Asked Question(FAQ):

1. What are the special limits on allowance of interest under Section 53?

Section 53 sets specific restrictions on how much interest expense taxpayers can deduct, ensuring compliance with Bangladesh Income Tax Act 2023.

2. Who is affected by Section 53 interest deduction limits in Bangladesh?

Businesses, companies, and taxpayers claiming interest expenses are subject to these limits under the 2023 tax law.

3. How is disallowed interest calculated under Section 53?

Disallowed interest is calculated based on prescribed thresholds, excess borrowing, or related-party transactions defined in the law.

4. Why does Bangladesh impose limits on interest deductions?

The limits prevent tax avoidance, profit shifting, and excessive debt financing that reduces taxable income unfairly.

5. Are there any exceptions to interest deduction limits under Section 53?

Yes, certain approved financial arrangements or sectors may receive exemptions based on tax authority guidelines.

6. How can taxpayers ensure compliance with Section 53?

Maintain proper documentation, monitor borrowing levels, and follow National Board of Revenue (NBR) rules to avoid penalties.