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FDR interest

samiksha (ca inter) (32 Points)

23 September 2020

If we have not taken investment in fixed deposit in balance sheet..what should be the treatment of interst
income from FDR which is being shown in Form 26AS in which Tds has been deducted??

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3 Replies

Sagar Patel (Tax and Business Consultant) (11611 Points)
Replied 23 September 2020

Interest income from Fixed Deposits is fully taxable.You are required to show that income under head Income from other sources in your ITR. You can take credit of TDS deducted.

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samiksha (ca inter) (32 Points)
Replied 23 September 2020

Thanks Sagar Ji..I would like to know the treatment in balance sheet as well

CA Kushwanth AVSR (CA in Practice CMA by Qualification) (1593 Points)
Replied 25 September 2020

Interest income from Fixed Deposits is taxable and has to be shown under the head Income from Other Sources. If the Assessee is an individual and had not shown the FD in his balance sheet then you can do two things.

1. Increase the Capital and FD:
FD A/c Dr
To Capital A/c
(Being FD was bought into the books of accounts in current year)

2. Show the interest income in the capital account only:
Bank A/c Dr
To Capital A/c
(Being FD interest received)

I recommend the second entry...