What minimum percentage of the borrower’s total asset book value must an inter-enterprise loan constitute for section 162(1)(b) to apply?
Question and options
What minimum percentage of the borrower’s total asset book value must an inter-enterprise loan constitute for section 162(1)(b) to apply?
25%
30%
50%
51%
Answer and explanation
Correct answer: D - 51%
Section 162(1)(b) of the Income-tax Act, 2025 treats a lender as an associated enterprise where its loan constitutes not less than 51% of the book value of the borrower’s total assets. A loan of exactly half the book value therefore falls short.
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