Non-banking Financial Company (NBFC) – Section 2(71) | Income-tax Act, 2025 vs 1961

§ 2(71) · Income-tax Act, 2025

Non-banking financial company

ITA 2025 · 2(71) ≈ S.36(1)(viia) Expl.(vii) · 1961 Act
Definition — Section 2(71)

Has the same meaning as assigned in section 45-I(f) of the Reserve Bank of India Act, 1934. Accordingly, a non-banking financial company means: (1) a financial institution which is a company; (2) a non-banking institution which is a company and whose principal business is receiving deposits under any scheme or arrangement or in any other manner, or lending in any manner; or (3) such other non-banking institution or class of institutions as the Reserve Bank of India may, with the prior approval of the Central Government, specify by notification.

Act Comparison
Income-tax Act, 2025
2(71)
Non-banking financial company
Income-tax Act, 1961
S.36(1)(viia) Expl.(vii)
Non-banking financial company — defined via RBI Act reference in Explanation to S.36
Key Points
  • Existed in the 1961 Act via Explanation to Section 36(1)(viia)(vii) — the 2025 Act elevates it to a standalone Section 2 definition
  • Both Acts cross-refer to the same source — Section 45-I(f) of the Reserve Bank of India Act, 1934
  • Specific deduction rules for provisioning against bad and doubtful debts apply to NBFCs under the 2025 Act
💡 Practical Note

NBFCs are taxed like companies but have specific deduction rules for provisioning — different from banks. They cannot claim blanket bad debt deductions.

Published by Simplified Tax India — Clear, section-wise comparison of Income-tax Acts. ← Back to Section 2 Definitions Table
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