9.2.9 Deduct tax on Roll-Over

When a loan is initiated, tax is applied on the principal of the loan. When this loan is rolledover or renewed, you have two choices (depending on the tax laws of your Country):

• Apply tax on the principal (outstanding principal + outstanding interest or only the outstanding principal), of the new loan.
• Since the principal of the old loan would have already been taxed once, you can choose to waive the tax on the principal of the rolled-over loan. However, if this principal has the outstanding interest from the old loan incorporated, then only the interest portion is taxed.

This option applies only to tax on principal and not to tax on interest.

This field assumes importance, when:

• Tax (for principal as well as interest) has not been waived on the old loan.
• Tax, has not been waived on the rolled-over loan.

If this tax is not waived for the old loan, it is applied on the new loan. If it is waived on the old loan it is not applied on the renewed loan.

Choose deduct tax on rollover, if tax on the old loan has to be liquidated before it is rolledover.