If Interest on unsecured loan is not paid during year & debited to loan account, whether interest on such intrest is allowable as deduction or not?
Whether such addition to loan amount requires any reporting in tax audit report?
hi Bhushan
welcome to caclubindia
interest on loan while added to loan it inflates your liability and it will be shown on liability side of the balance sheet and other effect should be in the P & L account.
deduction should be allowed on the basis of acrue or paid basis
as ur interest is accrue during the year u r allowed to claim deduction
no implication under tax audit
this r only suggestions and not a act said
other suggestions r also welcome.
CAclubindia
