CBDT Notifies NBFCs Classified into Top, Upper and Middle Layers for the Purpose of Sec. 43B & Sec. 43D

Notification No. 79/2023 & Notification No. 80/2023, dated 22-09-2023

Clause (da) of Section 43B provides that any interest payable on the loan taken from a Deposit-taking NBFC or a Systematically Important Non-deposit-taking NBFC shall be allowed as a deduction only when the payment is made.

Further, from the list of specified entities in Section 43D, only two classes of NBFCs are included: Deposit-taking NBFCs and Systemically Important Non-Deposit-taking NBFCs.

The Reserve Bank of India no longer follows such two classifications for NBFCs. Thus, the Finance Act 2023 substituted these two classes of NBFCs with such class of NBFCs as may be notified by the Central Government.

Now, the Central Board of Direct Taxes (CBDT) has notified the following classes of NBFCs for the purpose of these sections:

a) all NBFCs classified in the Top Layer;

b) all NBFCs classified in the Upper Layer; and

c) all NBFCs classified in the Middle Layer.

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