Income from other source

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

23 October 2013 Whether interest received or accrued on Fixed Deposit is chargeable under the head Income From Other Source?

CA Harish Shyam Choudhary

CA Harish Shyam Choudhary (Expert)
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23 October 2013 interest received or accrue on fixed deposit is chargable to tax under head "INCOME FROM OTHER SOURCES"

for any further query, feel free to ask

Regards
CA Harish Choudhary
E-mail: harishsc1989@gmail.com

Dintakurthi Tirumala

Dintakurthi Tirumala (Expert)
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23 October 2013 Yes, interest received or accrued on fixed deposits is chargeable under the head income from other sources.

But if such FD incurred for the purpose of business or incurring FDs is the main activity of the assessee then it should be taxable under the head income from Business or profession.

OM SAI SRI SAI JAI JAI SAI

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CA Pallav Singhania online

CA Pallav Singhania online

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23 October 2013 In General Accounting is to be done on accrual basis..
Hence, Accrued Interest on FD is chargeable to TAX..

Paying tax on accrual basis is beneficial to you if you are entering into a new tax slab from old one just due to interest addition in actual receipt basis.

Querist : Anonymous

Querist : Anonymous (Querist)

23 October 2013 if i have taken a fixed deposit on 1.5.2012, for 5 years worth rs 10000 @ 9% interest. the Fixed deposit matures at the end of 5 th year

should i include 4500(interest income) as income from other source on the 5th year
OR
rs 900(interest income) as income from other source for the year current year

which one is correct

Dintakurthi Tirumala

Dintakurthi Tirumala (Expert)
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23 October 2013 You have two choices and you can choose any of the option you want. If you offering Rs.900 for each year then it is called accrual basis of accounting otherwise if you offering it in the year of maturity then it is called cash basis of accounting. So it is depending on the method of accounting following by you.

However as per accounting standards and other acts accrual basis of accounting is suggested. However choice is yours.

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Querist : Anonymous

Querist : Anonymous (Querist)

23 October 2013 but the question is not related to accounts(AS) but tax.

what does the act state about this for the purpose of computation of tax for the current year?

Dintakurthi Tirumala

Dintakurthi Tirumala (Expert)
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23 October 2013 For the purpose of tax also you can chose any method but i saying generally department accepts accrual basis of income offering. as well as offering of income as per accrual basis is benefit to you because of due to the lump sum income considering in a single year(means on cash basis) your tax burden on such year may be huge.

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Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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10 October 2021 Get bank's interest certificate for the relevant year. Banks calculate interest paid and or accrued for the year. Based on that you can decide.