Master TDS & TCS Provisions with Critical Issues. Register Now!

Interest Accrued

Sandeep Ladha (N.A) (435 Points)

25 May 2011

I had FD with bank for 3 years for sum of Rs.50lacs.

For 31/3/2011 Interest accrued is Rs.321495.

In that TDS @ 20% is Rs.64300

What is the journal entry for Income as well as TDS receivable.

Thanks in Advance.

Reply
Follow
Share

17 Replies

(Guest)

@ sandeep: i don't have any practical experience but as far as my book knowledge

Bank a/c or Interest receivable a/c/ FD a/c dr        257195
TDS a/c dr         64300
     To Interest a/c     321495

Interest a/c dr    321495
    To p&L a/c       321495

Income Tax a/c dr 64300

To TDS a/c 64300

P & L a/c Dr [Whole Tax incl TDS]

To Income Tax a/c [Whole Tax incl TDS]

2 Like

Upgrade to CAclubindia Pro. Subscribe Now!

CA ADITYA SHARMA (CA IN PRACTICE ) (16719 Points)
Replied 25 May 2011

IF INTEREST IS PAYABLE ON THE MATURITY

INTEREST RECEIVABLEAC/ FDR AC.- - - - -- - - DR.257195

TDSAC- - - - - - -- - - -- - - - - DR.64300

TO INTEREST INCOME 321495

1 Like

CA ADITYA SHARMA (CA IN PRACTICE ) (16719 Points)
Replied 25 May 2011

TDS IS NEVER AN EXPENSE CHARGABLE TO P AND L AC.

Anshu Garg (working) (139 Points)
Replied 25 May 2011

IN MY OPINION,

ACCRUED iNTEREST A/C DR. 321495

TO iNTEREST 321495

THEN,

FDR A/C DR. 257195

TDS A/C DR. 64300

TO ACCRUED INTEREST 321495

THEN,

CASH/BANK A/C. DR. 5257195

TO FDR 5257195

AND TDS WILL BE SHOWN AT ASSETS SIDE AS BALANCE WITH REVENUE AUTHORITIES UNDER THE HEAD LOANS & ADVANCES AND THIS ENTRY WILL BE DIVIDED INTO 3 PARTS FOR 3 YEARS

1 Like

Harpreet (* * * * * *) (1670 Points)
Replied 25 May 2011

As Bank will never deduct all the TDS amount in one time, bank liable to deduct tax @ 10% as TDS. And Mr. Aaditya is right that you have to record/book interest amount as your income on accural basis. If you are individual then i would suggest you to show your this income year wise accural basis to avoid tax burden in final year as you can show all the interest amoutn in final year but bank will deduct your TDS year wise and @ 20% if you dont have PAN.

1 Like

Upgrade to CAclubindia Pro. Subscribe Now!

Adityakumarhv (CA Final) (45 Points)
Replied 25 May 2011

Hi Anshu............

You are credited interest twise..so i think it will be wrong....bcz in your point of view interest amount will be Rs 321495 +Rs. 321495 is it??

1 Like

Saurabh Aggarwal (Chartered Accountant) (371 Points)
Replied 25 May 2011

as discussed earlier the simple entry shall be

Interest Accrued on FD/ Fixed Deposit A/c Dr... 2,57,195.00

TDS on Interest Dr... 64,300.00

To Interest Income 3,21,495.00

Interest Accrued & TDS Shall be Loans & Advances
Interest Income Shall be Income T

Thanks & Regards

1 Like

CA ADITYA SHARMA (CA IN PRACTICE ) (16719 Points)
Replied 25 May 2011

Originally posted by : Adityakumarhv
	On Accrual basis 1) For Interest accrued for year 1st ( for next 2years also same entry has to be passed) Fixed Deposit A/C......Dr 85732 TDS receivable A/C......Dr 21433 To Interest A/c 107165 2) In year 3rd year after maturity of FD Cash or Bank A/C......Dr 5257196 To Fixed Deposit A/C 5257196 On receipt basis Interest has to be recognised in year 3 only after receipt of FD

321495 is one year interest how can you devide into 3 parts?

on 50 lakh if we take minimum 8% interest than interest will be 4 lakhs per annum

regards

future ca

CA ADITYA SHARMA (CA IN PRACTICE ) (16719 Points)
Replied 25 May 2011

Originally posted by : Adityakumarhv

thanks for modifying the message

1 Like

Ashish Chhawchharia (Chief Manager Finance) (38 Points)
Replied 25 May 2011

The Accounting Entry shall be-

01. Interest Receivable A/c......Dr. ( 321495-64300)

TDS A/c....Dr 64300

TO interest received A/c 321495.

1 Like

Upgrade to CAclubindia Pro. Subscribe Now!

Devang (Service) (34 Points)
Replied 26 May 2011

in my opinion as below u can pass the entry

DR Interest accured but not due Rs. 257195 Assets Account

DR TDS Receivable Rs. 64300 Assets Account

CR Interest Earned Rs. 321495 Income Account

1 Like

Harpreet (* * * * * *) (1670 Points)
Replied 26 May 2011

As you all are confusing him as per my view of point, the entry should as per Form 16A which will be issued by the BANK. at the end of every Financial Year. Interest part should be recorded as per FORM 16A. Whatever amount in Form 16A, the entry should be as follow:

Interest Accrued on FDR A/c (Current Assets) Dr 1000 (For example)

TDS Receivable (Current Assest) Dr 100 (For example)

To Interest received on FDR A/c Cr 1100 (For example)

I hope now you all dont have any query remain. This practice is used if you go with accural basis which follows by the corporates but in case of individual you can adopt both the basis i.e. Cash Basis or Accural Basis.

I would suggest you that follow the accural basis to avoid tax liability in final year if you have FD for 3 year or more as by using accural basis tax liability divides in every year.

1 Like