Interest paid on I.T. / Interest received on I.T. Refund

This query is : Resolved

Kalyan Kumar Mitra (Querist)
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16 July 2011 1. When we pay interest due to delay in payment of Advance Tax or I.T. dues, is the interest paid a deductible expense?

2. When we receive interest paid by I.T. department along with an I.T. refund, is the interest amount a part of taxable income?

CA Navin Jain

CA Navin Jain (Expert)
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16 July 2011 1. not delectable as exp

2. interest will be taxable

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Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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16 July 2011 1. Income tax is not deductible as per section 40(a)(ii) of the Income tax Act,1961. As a corollary interest on such payment also is not a business expenditure.
2. Yes, under section 56(1) of the above referred act,since there is no specific exclusion in the said act.

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