Companies, that enjoyed waiver of interest on loan and tax exemption on the interest amount on their loans, may not be able to avail that facility from next year.
The government is likely to propose this in the finance bill of the next budget.
However, individual taxpayers will continue to get tax exemption on such waived loan interest as usual.
Businesspeople say the move will be effective in tackling irregularities of loan repayments.
But for those who are not irregular and only defaulted in the face of business losses, this will create additional stress for them.
Business leaders say such an initiative would be inhumane, because one has to understand at what stage a company goes bankrupt.
At present, under Section 19 (11) of the Income Tax Ordinance, no taxpayer will be subject to income tax if he has been waived a bank loan or interest.
As such, both the individual and the company – the borrower – have been getting tax exemptions on such interests.
However, over the past few years, massive amounts of loans have been turning into defaults and most of the default loans are disbursed to companies rather than to individuals.
Sources say banks cannot waive the principal amount of a loan.
If a borrower defaults, he may get a waiver on the whole or part of the interest at the end of the process.
Often a company goes into default due to losses caused by factors beyond their control.
However, in the last few years, the issue of defaulting intentionally has become common in Bangladesh.
There are allegations that sometimes the bank also has a hand in this.
In such cases, banks waive the interest on these loans. As there is tax exemption on this money, it becomes very easy.
Sources say that if the loan is not repaid, it goes on year after year.
Sometimes it ends up in court.
Sometimes the amount of interest becomes more than the principal amount. The interest on the loan can be easily waived as there is no accountability.
Exact figures on how much commercial banks have waived interest rates are not available.