Tds on accrued interest but receipt basis followed in itr

I first of all doubt whether you can declare income under other sources on cash basis. Only in income from business or profession you can declare income under cash basis.

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IOS can be shown on cash basis, but since interest was deducted you'd have to show interest.

You didnt get my point. TDS was not deducted this year. But it can be deducted in coming years. Plz try to understand my question

You have no option to follow cash basis of accounting for Interest on Bank deposits. Interest accrued year on year must be included in your income of same year. points which u need to take care of:

1. Get Interest accured certificate from bank every year.

2. If Interest exceeds 10000/- ensure that bank deducts TDS on accual basis. Some banks have this lousy habit of deducting tax only in the year in which the FD matures

3. Claim the TDS in respective years after getting proper TDS certificate from bank and ensuring that such TDS is relected in  your Form 26AS. This is important since the credit for TDS will be given only in the year in whcih the income is offered for taxation.

The fact that no TDS was deducted this year or will not be deducted in subsequent years does not change the method in which you have to show the interest received/earned in your IT return.

Hope this makes things clear.

Sir,

You have an option to consider your income on accrual and cash basis. now when u opted for cash basis and tax is also deducted u have to consider tds part as amount received and for remaining part u may opt cash basis.

Thanks and regards Jayesh Bothra

No you cant get the refund of TDS deducted.

While filling the return for the A/y 11-12 where the detail of TDS deducted is to be fiiled, there are two seperate columns, one for TDS deducted and another for TDS claimed during the year. Write the full amount in TDS deducted column, and nil amount in TDS claimed column.So that u can claim the TDS in the next year when income is offered to tax as per receipt basis.

Rule 37BA(3)(i) reads as under:

(3) (i) Credit for tax deducted at source and paid to the Central Government, shall be given for the assessment year for which such income is assessable.

As per the books of account maintained by you, the income can be offered on cash basis and TDS relating to the said income can be claimed as prepaid tax.  The assessment year mentioned on the TDS certificate also is a different assessment year other than the assessment year in which the income is offered to tax.   If the order is passed without considering the credit for TDS you can move an application u/s 154 asking for credit of TDS as per the provisions of section 199 r.w.r. 37BA.

Dear Saurav,

This is a practical problem when you choose to offer the income on receipt basis while the Bank does so on accrual basis.To make life easy,it is always advisable to offer the interest earned in the year when the TDS is deducted.Now that you did not offer your interest income for taxation in the last year,I suggest that you continue on cash basis for this 5-Year F.D. but take care to place only so much more F.D. in the same Branch such that the yearly interest accrued by the Bank would be less than Rs.10,000/-.This way you can avoid TDS.

In future please follow the accrual system to avoid any complications of this sort.(Though you have the option to opt for accounting on cash basis).