Interest income

This query is : Resolved

rgurucharan (Querist)
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19 August 2009 Dear sir,

We are receiving quarterly interest income from the fixed deposit made in the name of our organisation.

The interest income is disclosed in the finacial statement at the net of TDS u/s 194A. Rs. 79.40 is only disclosed in the books. Balance of Rs. 20.60 is disclosed at the year end on the receipt of TDS certifcate issued by the Bankers.

As per the AS 13 the interest income should be disclosed at the gross income basis.

Pls guide me the accounting entries to be passed on the quarterly basis & the disclosure requirement as per the AS 13.

with regards,

R. Gurucharan.

CA Ravi Kumar Murugesh

CA Ravi Kumar Murugesh (Expert)
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19 August 2009 You should always show the interest income as full by considering the TDS also.

for eg: if interest income shown in bank passbook is Rs.79.40, means tds is at Rs.20.60. Then you should book Rs.100 as interest income in your books of accounts.
receipt entry is like this:
Debit : Bank Rs.79.40
Debit : TDS receivable Rs.20.60
Credit: Interest on FD Rs.100

If you dont know about TDS details, you can get your fixed deposit statement from your bank before booking your interest income thereby you can find TDS details and how they have calculated interest etc.

What ever it may be, you have to book that income before closing of accounts for that particular period.