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FCNR NRE FDs in Balance Sheet

Rakesh (libi789@yahoo.com) (102 Points)

03 May 2012

I have questions regarding the FCNR and NRE FDs

I have some FCNR and NRE FD accounts since one year. Till now I did not enter these details about the interest earned in capital account and in Balance sheet as I thought that the Interest earned on FCNR and NRE FDs is tax free. But I presume although the interest is tax free I should still show these investments and balance of my NRE A/C details in my capital account and balance sheet.

What are your views? Should I show the interest earned on FCNR, NRE FDs in capital account and balance of NRE A/C details in my Balance sheet?

Thanks in advance

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frank (owner) (131 Points)
Replied 05 May 2012

Book FD's under investments in Balance Sheet with the principle amount, book the interest as accrued because the FD is not yet matured. Your bank on request will give you the accrued interest certificate at the end of every year for income tax purpose. On maturity square off that particular FD principle amount in the FD a/c and book the interest as income reversing the accrued a/c and what you received in the current year. This is for your accounting purpose only since there is no tax on NRE income so far.

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