Whether Accrued Income to be included in Taxable Income ?
This query is : Resolved
11 April 2011
Does Accrued Interest Income have to be included in the Taxable Income for the year ? Are there any ways by which it can be shown in the year when it is actually realized ?
For e.g. Say I have a Cumulative Fixed Deposit in a Bank for Rs. 1,00,000 which I opened on 1-4-2010 & which is maturing on 31-3-2012 & which pays interest at the rate 10% p.a. . Interest for the first year will be Rs. 10,000/- & for the second year , it will be Rs. 11,000/- . (10 % on 1,10,000 ) .
Now , if Income Tax has to be paid on accrued income , then I shall have to pay Rs. 2000/- tax at end of first year & Rs. 2,200/- tax for the second year income (assuming I pay tax @ 20 % ) . However , if I have an option to pay the entire tax when the F.D. matures , then I can pay Rs. 4,200 straightaway after the F.D. matures on 31-3-2012 . I would prefer paying the Income Tax when the F.D. matures .
Is there anyway by which one can pay Income Tax on Interest Income this way ?
For e.g. Say I have a Cumulative Fixed Deposit in a Bank for Rs. 1,00,000 which I opened on 1-4-2010 & which is maturing on 31-3-2012 & which pays interest at the rate 10% p.a. . Interest for the first year will be Rs. 10,000/- & for the second year , it will be Rs. 11,000/- . (10 % on 1,10,000 ) .
Now , if Income Tax has to be paid on accrued income , then I shall have to pay Rs. 2000/- tax at end of first year & Rs. 2,200/- tax for the second year income (assuming I pay tax @ 20 % ) . However , if I have an option to pay the entire tax when the F.D. matures , then I can pay Rs. 4,200 straightaway after the F.D. matures on 31-3-2012 . I would prefer paying the Income Tax when the F.D. matures .
Is there anyway by which one can pay Income Tax on Interest Income this way ?
11 April 2011
NO.Interest on f.d. is to be shown as on accural basis. It can not be shown on cash basis.
Message likes :
1 times
11 April 2011
Interest on FD,to be offered under "income from other sources", can be declared on "cash basis" as per section 145 (1) of the Income tax Act,1961 meaning there by FD interest can be offered in the year of maturity if the assesse so opts provided that method has to be regularly followed.
20 April 2011
I agree to Mr. Warrier but will like to add here that Bank shall surely(if the interest exceeds amount specified in sec 194A )deduct the TDS and practically it shall be difficult for you to claim the same in the third year.
So my advice shall be to show the income and claim TDS in the year of accrual.
So my advice shall be to show the income and claim TDS in the year of accrual.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Is this income indian or foreign income?
- REGARDING GST ON COMMERICIAL PROPERTY
- 15ca /15cb whose income tax login? remitter or nri seller's login?
- GST on export of services and Input Credit
- ITC temporary reversal and reclaim
- Regarding Documentation & Compliances for Opening of Unit of Pvt Ltd.
- RCM applicability on Rent Paid by Registered Person to Unregistered Landlord for Residental Building
- TDS U/S. 194NF
- Applicable TDS rate for sale of property in Nov 2024
- REGARDING 25 AS DATE OF PAYMENT AND DATE OF BOOKING
- Payment of bonus act - notice pay recovery
- MIS MATCH OF INVOICE NUMBER
- GST Regis.
- ITC c/f from FY2022-23 to FY2023-24 entered the same in table 8C of GSTR9 of FY 2022-23, in FY23-24
- Late filling fees Demand by gst office
- IGST Credit-Show cause notice issued-confusion
- Short and Excess provision of expenses
- Issue of gst e invoice
- Interchangeable words in accounts
- Adjusted profit/Loss in the case of LLP and Pvt. Ltd.company
Trending Online Classes
CAclubindia
