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Interest received from debtors

Pawan Mittal (CA Final) (702 Points)

24 July 2014

Dear Experts

One of our client is charging interest from debtors for late payment of their dues. Under which head of income tax this interest income will be chargeable? Under "Business and Profession" or "Other Sources"?

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14 Replies

CA. sanjeet Kumar Ojha (Chartered Accountant) (272 Points)
Replied 24 July 2014

It shall be taxed under the head of PGBP

Neha Bhattar (none) (170 Points)
Replied 24 July 2014

As the debtors are related to the business, this will be treated as business income.

Ankit Kuldeep Hudiya (Individual Practictioner) (22 Points)
Replied 24 July 2014

It would be taxable under pgbp as it is directly related to business

Dimple (sybcom) (21 Points)
Replied 24 July 2014

it must be charged under bussiness n prof. as its related to businesss

Sandeep (student) (216 Points)
Replied 24 July 2014

Surely PGBP and not any other head

CA Dinesh Jangid (Professional) (24 Points)
Replied 24 July 2014

Its a Business Income so will be booked under Business & Profession Income

Harshil (student) (65 Points)
Replied 24 July 2014

Dear pawan. Debtors is part of business ......u received int. From debtors is a business income.... ..................

Gautam (partner) (21 Points)
Replied 24 July 2014

It shall b charged undr pgbp.....

CA Himanshu Bansal (Risk Manager) (2345 Points)
Replied 25 July 2014

Should be shown as other income directly relating to the business under the head PGBP

CA AKSHAY GARG (ASSISTANT MANAGER) (362 Points)
Replied 25 July 2014

Only under the head PGBP

Abhijeet (CA-FINAL) (28 Points)
Replied 25 July 2014

keeping in view the provisions of section 28 which are as follows "the profits and gains of any business or profession which was carried on by the assessee at any time during the previous year" so by receiving interest the assessee is gaining something and the same is related to his business, therefore the interest should be taxed under the head PGBP.