Section 14 : Interest deduction

1) Any person may, for the purpose of computing his income from any business or investment in any income year, deduct all interests chargeable in that year under the following debt liabilities created for the act of generating income from the business or investment of that person:-

a) If the debt liability has been created for having borrowed any amount, and that amount has been used in that year or used to buy any property used in that year, or

b) That debt liability has been created in any other circumstance.

¹c) …………………………….

2) Notwithstanding anything contained in sub-section (1), a resident entity controlled by an organisation entitled to tax exemption can deduct the interest if paid to the person controlling or the concerned person pursuant to sub-section (1) in any income year and such interest amount shall not exceed the total of the following amounts:

a) All interest amounts obtained in that year to be included in the computation of the taxable income of that entity, and

b) Fifty percent amount of the adjustable taxable income of that entity in that year, which has been computed excluding any interest derived by that entity or without deducting any interest paid by that entity.

3) Any interest not allowed to be deducted or not deducted pursuant to sub-section (2) may be carried forward or credited in the forthcoming income year.

Explanation: For purposes of this Section, ” a resident entity controlled by an organisation entitled to tax exemption” means an entity which, being a resident entity in that year, is subject to a vested ownership or control of twenty-five percent or more of the following persons or organisations in any time of that year:-

(a) An organisation entitled to tax exemption and a person associated with that organisation,

(b) A person entitled to tax exemption pursuant to section 11 in that year or a person associated with that person,

(c) A non-resident person or a person associated with the non-resident person or

(d) Any combination of the persons referred to in clauses (a), (b) and (c).

^{1 Removed by the Financial Act, 2075.}