07 March 2011
Hi Prakkash. Please be assured that there is no method prescribed under the Income Tax Act for calculation of accrued income in respect of bonds, FDs, etc and not even for the NSCs!!! The interest calculation chart for the NSCs has been prescribed under the National Savings Certificates (VIII Issue) Rules, 1989. Nonetheless, the calculation of income accrued in respect of any bond, FD, etc is a simple process and depends entirely upon the conditions under which any such instrument is issued. The interest may accrue on a simple basis or on a compounded basis, and accordingly its computation shall be made. However, there is no provision in the Income Tax Act providing for any such computation.
07 March 2011
Prakkash, as I have already mentioned, there is no set format for calculation of accrued income. Such calculation is a stand alone process and is to be undertaken independently for every instrument or class of instruments.
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