Interest on unsecured loan

3327 views 5 replies
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?
Replies (5)
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.  
hi dear

wel the addition/repayment made in loan is required to be shown in the tax audit report as per the requirement of form 3cd
Gud Day!!
I think as per the ammdmt made last year such int not paid and treated as loan are not allowed..

Its just my part knowledge....sub to confirmation.....

SD
FIRST OF ALL INTEREST AMOUNT IS NOT DEBITED BUT CRDEDITED IN LOAN ACCOUNT.

THE TOTAL OUTSTANDING FIGURE WITH PRINCIPAL AND INTEREST IS REPORTED IN 3CD. AND IT WILL BE INCLUDED FOR CALCULATING " MAXIMUM OUTSTANDING DURING THE YEAR AT ANY TIME". IT IS ALLOWED AS BUSINESS EXPENDITURE IN THE SAME YEAR OF CREDITING IF  TDS ON THAT PART IS PAID ACCORDINGLY  BEFORE 30TH JUNE OF A.Y. ( SEC. 40(a)(ia) OF IT ACT).

REGARDS
  

In general, the interest on unsecured loans can depend on the tax laws. However, I can provide some general information that may help guide you:

  1. Deductibility of Interest on Unsecured Loans:

    • Unsecured loans interest expenses are generally deductible for tax purposes.
    • However, the deductibility may be subject to certain conditions, such as the loan being taken for a business purpose.
    • Failure to pay interest during the year does not necessarily negate the deductibility, but it's essential to follow the relevant tax rules.


CCI Pro

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register