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FDR Interest (Income Tax)

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This query is : Resolved


( Author )
27 February 2011

FDR interest is taxable u/h other sources ...right !

wat abt accrued FDR interest...?
hw shud i calculate it ?
and hw shud i show in balance sheet and computation......

if u can explain then plz do ....full treatment of FDR interest...


CA KRISHNA KUMAR DARUKA

( Expert )
28 February 2011

FDR interest is taxable and should be accounted on accrual basis. It can be calculated on the basis of rate given in the FD receipt or you can take an annual accrual certificate from your bank. It should be accounted for as follows:

Interest Accrued(FDR) a/c Dr
Interest earned on FDR Cr

Interest Accrued(FDR) will be a Balance Sheet item, whereas Interest earned on FDR will be a Income side item of P&L a/c.

When you actually receive the interest from bank, then it should be credited to Interest Accrued(FDR) a/c.


Gourav Kapoor

( Author )
28 February 2011

at wat anount fdr will be shown in balance sheet.....invested amount or invested + interest earned amount ?


CA KRISHNA KUMAR DARUKA

( Expert )
28 February 2011

You can Show FDR in either of following way:

1. FDR(Including accrued interest)

2. a) FDR
b) Accrued interest on FDR


Gourav Kapoor

( Author )
28 February 2011

ok
now take an example as the following :
an amount of rs. 90000 invested as FDR @ 9.75 % for 555 days as on 15-02-2011.
now tell me wat shud be the treatment as on 31-03-2011


CA PARAS BAFNA

( Expert )
28 February 2011

Calculate Interest of 1.5 month @9.75% p.a. on Rs. 90000/- which can be calculated as under
90000*.0975*1.5/12= 1097
Show as under in the Balance Sheet -

FDR.................... 90000
Accd Interest on FDR...1097


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