Accrued interest on fixed deposit
This query is : Open
22 April 2012
An FD matures in 180 days and was entered on 1 January 2012. At the end of March 2012, how should we recognise the accrued interest. Should we recognise TDS on accrued interest or else we should recognise only accrued interest.
My question is TDS would be deducted only on 30 June 2012. So do we need pass TDS deduction entry too as at 31 March 2012.
My question is TDS would be deducted only on 30 June 2012. So do we need pass TDS deduction entry too as at 31 March 2012.
23 April 2012
Interest on FD will be accounted for on 31st March 2012 and TDS will also be deducted and the bank will issue form 16A to you.
Interest and TDS entry for Fy 2011-12 will be passed on 31.03.2012.
So get the amount of Interest and TDS confirmed from Bank and make the entry for the same.
Interest and TDS entry for Fy 2011-12 will be passed on 31.03.2012.
So get the amount of Interest and TDS confirmed from Bank and make the entry for the same.
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23 April 2012
Even if the amount of interest will be received at the time of maturity, the interest is accrued at the end of financial year.
Banks are required to deduct the TDS on such interest, Accrued quarterly/monthly as per their scheme of FD, and pay to the govt.
So, please ask to bank for form no.16A and book the accrued interest in your books.
Banks are required to deduct the TDS on such interest, Accrued quarterly/monthly as per their scheme of FD, and pay to the govt.
So, please ask to bank for form no.16A and book the accrued interest in your books.
23 April 2012
You have to account for the gross amount including TDS as your income and TDS can be treated under the head advances.
23 April 2012
TDS should be deducted at the time of payment and not at the time of accrual. In such a case, how can we account for at 31/12/2012. Bank is not paying me any interest as on 31/12/2012. Bank shows the balance accrued in my account and it would deduct tax at the time of maturity.
What if there are changes in the TDS rates from AY 2012-2013 and for AY 2014-15. How should I make the changes in the accounting then...?
What Agarwal ji, what I have asked and what are you replying? Please sir, avoid generalized answers.........I am not asking petty doubts........I need solid answer for the accounting purposes.
What if there are changes in the TDS rates from AY 2012-2013 and for AY 2014-15. How should I make the changes in the accounting then...?
What Agarwal ji, what I have asked and what are you replying? Please sir, avoid generalized answers.........I am not asking petty doubts........I need solid answer for the accounting purposes.
24 April 2012
Tax is deducted at source at the time of credit of such income to the account of payee or at the time of payment whichever is earlier.So since you will receive the interest on maturity only but the interest will be credited by the bank as on 31st March and hence tax will be deducted and bank will issue you Form-16A.So ask for Form-16A from the bank and pass entries of accrued interest considering TDS.
Hope you are satisfied with the reply.......
Hope you are satisfied with the reply.......
24 April 2012
Thanks dhanwanti
Ofcourse satisfied...Even if bank credits our account, the amount cannot be withdrawn. In that case, how can it be taken as income and tax can be deducted by bank......If there are changes in TDS rates next year and bank deducts more tax than what we have taken as credit, then how we shall adjust the books. TDS should be setoff only against the respective year of income or else any year of income.
Ofcourse satisfied...Even if bank credits our account, the amount cannot be withdrawn. In that case, how can it be taken as income and tax can be deducted by bank......If there are changes in TDS rates next year and bank deducts more tax than what we have taken as credit, then how we shall adjust the books. TDS should be setoff only against the respective year of income or else any year of income.
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