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Cash or accural - ios income ?

AMIT (bus) (444 Points)

25 March 2015

INCOME FROM OTHER SOURCE :-

Is that ok to follow CASH basis for RD Interest & Accural Basis for FD Interest ??

Please Clarify..

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4 Replies

Vishal Goel (Chartered Accountant) (1688 Points)
Replied 25 March 2015

Hello,

Each category of investments would generally constitute a separate source of income, and a different method of accounting can be adopted for each such category. For instance, debentures and bonds may constitute one source, company fixed deposits another, bank fixed deposits a third source, and so on. Therefore, it is possible to account for the interest on company deposits on a cash basis, while accounting for interest on bank deposits on an accrual basis.

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Vineet Goyal (Assistant Manager - Finance & Accounts) (702 Points)
Replied 25 March 2015

I think you should follow one system for both RD and FD. Usually individuals prefer to use cash basis for these type of earnings.

AMIT (bus) (444 Points)
Replied 25 March 2015

Originally posted by : Vishal Goel
	Hello, Each category of investments would generally constitute a separate source of income, and a different method of accounting can be adopted for each such category. For instance, debentures and bonds may constitute one source, company fixed deposits another, bank fixed deposits a third source, and so on. Therefore, it is possible to account for the interest on company deposits on a cash basis, while accounting for interest on bank deposits on an accrual basis.

Thanks for your reply.

I would like to know under which section is it covered that we can go with Different method of accounting UNDER SAME HEAD OF INCOME ?

As Section 145 clearly states that IOS & PGBP can go with Cash or accural basis.