In certain scenerios, some companies may choose to finance with a bank loan specifically because of the deductibility of interest. It could lower their taxable income enough (assuming it is not a corporation at the current 21% flat rate) to put them in a lower tax bracket. This means they could end up paying less money after interest and taxes are paid. It is interesting that bank interest could be utilized as a cash flow strategy! Do you think this is something many finance managers may consider?
In certain scenerios, some companies may choose to finance with a bank loan specifically because of the deductibility of interest. It could lower their taxable income enough (assuming it is not a corporation at the current 21% flat rate) to put them in a lower tax bracket. This means they could end up paying less money after interest and taxes are paid.
It is interesting that bank interest could be utilized as a cash flow strategy!
Do you think this is something many finance managers may consider?
Interest payment deduction can be claimed on borrowings while computing business income provided that the borrowing is used for the purpose of business. It could lower their taxable income enough to put them in a lower tax bracket. The interest paid on borrowing which is used for purchase of listed shares on stock exchange or making direct investments in IPO will not be allowed as deduction against capital gains.
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