Banks will soon move the government as they find themselves caught in the tax net while settling and rejigging loans to give distressed borrowers a second chance. Slices of loans waived to lessen the strain on defaulting borrowers are being interpreted as 'benefits' that lenders are passing on to borrowers under the new provisions the government has come out on tax deducted at source (TDS). Even though there is no transfer of cash from the bank to the borrower, the extent of haircuts taken by lenders is imputed as 'income' for the borrower.