Lahore 23°C
Karachi 28°C
Provision regarding consumer loans
(1) A non-banking finance company or the House Building Finance Corporation shall be allowed a deduction, not exceeding three per cent of the income for the tax year, arising out of consumer loans for creation of a reserve to off-set bad debts arising out of such loans.
(2) Where bad debt cannot be wholly set off against reserve, any amount of bad debt, exceeding the reserves shall be carried forward for adjustment against the reserve for the following years. Explanation.— In this section, consumer loan means a loan of money or its equivalent made by a non-banking finance company or the House Building Finance Corporation to a debtor (consumer) and the loan is entered primarily for personal, family or household purposes and includes debts created by the use of a lender credit card or similar arrangement as well as insurance premium financing.
(2) Where bad debt cannot be wholly set off against reserve, any amount of bad debt, exceeding the reserves shall be carried forward for adjustment against the reserve for the following years. Explanation.— In this section, consumer loan means a loan of money or its equivalent made by a non-banking finance company or the House Building Finance Corporation to a debtor (consumer) and the loan is entered primarily for personal, family or household purposes and includes debts created by the use of a lender credit card or similar arrangement as well as insurance premium financing.
Amendment history (6)
- Inserted by the Finance Act, 2003.
- The words “banking company or” omitted by the Finance Act, 2009.
- Inserted by the Finance Act, 2004.
- Added by the Finance Act, 2004.
- The words “a banking company or” omitted by the Finance Act, 2009.
- The words “Non-bank Financial Institutions” substituted by the Finance Act, 2003.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
Source FBR PDF page 83
Unofficial reference, compiled from the FBR’s consolidated Income Tax Ordinance 2001 (amended up to 30 June 2026). Provided for general information only — not an official FBR publication and not legal or tax advice. Always verify against the official FBR text before relying on it for filing or any decision.