23 April 2013
I have a sweep facility connected to my ICICI savings account such that funds in excess of a threshold (I think Rs 10,000) are automatically swept to an FDR which gives higher interest (7% vs 4%). If a cheque is presented in excess of the balance of the savings then some of the FDR is reverse swept to the savings account.
Interest for the FDRs was paid in March 2012 and reported on Form 16A. However, subsequently in April & May 2012 the FDR were closed due to a reverse sweep, then some interest was reversed, since the FDR is deemed to be prematurely closed and the prior interest paid in March is too high, since it was based on the regular maturity interest rate. However, no negative interest is reported in Form 16A, thus the total interest reported on Form 16A is overstated. ICICI have also told me they cannot correct this. Amount of negative interest (interest reversal) is about Rs 24,000.
When I file my income tax return for FY2012-13 (AY2013-14), should I state interest income as the correct amount (after reducing for the negative interest), or should I state based on Form 16A? I assume if I use the Form 16A amount then no questions will be raised. If I use the correct amount, will it raise questions and delay processing of the return and require me to go through a lengthy explanation process? Does IT Department compare the interest reported on Form 16A to that reported on the tax return?
Also, this issue crosses fiscal years. For FY2011-12 I reported the full interest (since at that time I didn't know interest would be reversed), so now in FY2012-13 I would be reporting a reduction of prior year's interest income, but of course the reduction happened in FY2012-13 and affects the total interest earned in FY2012-13.
30 June 2013
If you have submitted your correct return in time then you have time for revising it. Or against the present Interest you reduce the reversed interest and file current year's return
CAclubindia
