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Intrest on FD

uma shankar khatri (proprietor) (132 Points)

10 May 2021

We have FD with Bank. Bank has given statement of FDs.,intrest & TDS, In this they have mentioned 3 amounts, (1) Principal as on 31-3-21,(2) Intrest Amount ( Intrest Earned ),& (3) Intrest Accrued. Intrest Earned is bigger amount & intrest accrued is smaller amount. Now How much intrest should we Credit to intrest account and to Debit FDs account. Please guide . Thanks.

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8 Replies

yasaswi gomes (My grammar is 💯 good I) (7290 Points)
Replied 10 May 2021

No need to debit fd account.

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CA. Sourav Sarkar (Chartered Accountant ) (24583 Points)
Replied 10 May 2021

Credit the interest received

CMA Poornima Madhava (CMA) (13112 Points)
Replied 10 May 2021

1) Interest accrued during the year 20-21 is the taxable income for FY20-21. This amount is usually mentioned in 26AS too.

2) If you want to create a provision for accrual of interest, you may credit interest income a/c (indirect income) and debit interest accrued but not received a/c (under current assets) as well as TDS receivable a/c (under current assets).

Total interest income = Accrued interest + TDS

uma shankar khatri (proprietor) (132 Points)
Replied 10 May 2021

Thanks Poornima Madam. but in my case Bank has given Two figures of intrest- (1) Intrest earned -Intrest amount (2) Intrest accrued, NO TDS as the intrest amount is below Threshold amount, Therefore NO 26AS, Then What is my Total Intrest Income for F.Y. 20-21 ? Sum of both amounts OR only accrued intrest amount ?

Pl. reply & oblige.

CMA Poornima Madhava (CMA) (13112 Points)
Replied 10 May 2021

I think:

a) interest earned here refers to the interest that was due and paid by the bank and

b) interest accrued is interest due but not yet paid by the bank

But am not sure of this. So just check your bank statement for credit of interest during the year to match interest earned.

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uma shankar khatri (proprietor) (132 Points)
Replied 10 May 2021

Thanks poornima madam for clear reply.

Chirag (Professional) (1979 Points)
Replied 11 May 2021

Generally ,Bank always give figure in Interest credited + Interest accrued only ,For TDS you have to get Form 16A ,Generally I recommend to take only Receipts and not accruals (If you are individual ) ,because what happen that this year TDS is not debited assuming you have submitted 15G/15H or Interest doesn't exceed INR 50,000 but if in next FY (CFY 21-22) ,if you unable to submit 15G/15H due to crossing threshold of INR 2.5/3.0 Lacs and Interest exceeds the limit of INR 50K, then bank will debit TDS @ 10% on Payment basis which will also include accruals as on 31/3/21 ( due to non paid in that year )& 26AS will show whole amount ,and then if you reduce accruals already included in past year ,it may create mismatch for current year ,So its always better to go with Receipt basis, due to this practical issue !

PARTHA RAY (2 Points)
Replied 12 May 2021

A professional generally maintains accounts on Cash Basis. If you maintain Cash Basis, account for only the amount credited to your Bank Account, otherwise Interest Received + Accrued Interest has to be included as part of Interest Income during the year.