Breaking of FD in Pvt Ltd Company
This query is : Resolved
21 May 2026
Dear Sir,
One of my client runs a Pvt Ltd. company in which he has booked and FD of Rs. 5 lacs in the year 2022. Now he wants to break that FD and withdraw the amount either in the form of Salary or any other source of income.
My query is the company does not earn much profit hence if the company gives Rs. 5 lacs as salary or any other expense will there be any compliance issue to the company with the loss of Rs. 5 lacs carry forward to next year.
Please help me in this matter
One of my client runs a Pvt Ltd. company in which he has booked and FD of Rs. 5 lacs in the year 2022. Now he wants to break that FD and withdraw the amount either in the form of Salary or any other source of income.
My query is the company does not earn much profit hence if the company gives Rs. 5 lacs as salary or any other expense will there be any compliance issue to the company with the loss of Rs. 5 lacs carry forward to next year.
Please help me in this matter
21 May 2026
Compliance Issue: Liquidating the FD is legal, but booking the ₹5 Lakhs as a sudden salary or random expense solely to create an artificial loss will likely face disallowance under audit (Section 37/40A(2)) if there is no commercial business substance behind it.
Tax on Individual: If taken as salary, the company must deduct TDS, and the client must pay personal income tax on that ₹5 Lakhs.
Carry Forward: If the loss is genuine and accepted, it can be carried forward for 8 years, provided the company files its corporate ITR strictly before the due date.
Tax on Individual: If taken as salary, the company must deduct TDS, and the client must pay personal income tax on that ₹5 Lakhs.
Carry Forward: If the loss is genuine and accepted, it can be carried forward for 8 years, provided the company files its corporate ITR strictly before the due date.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Refund Annexure-B
- Sale of Equity shares for Purchase of Residential Property
- Liable to deduct tds and 44ADA
- Nomination of Bank for refund in itr 2
- Section 56(2) of the Income tax Act 1961 , Gift to relative .
- Gstr7 vs Gstr3b 2026
- Gst return - cess
- Is Interest applicable for payment made through credit ledger vide DRC03 for FY 2020-21 & 2021-22
- ECO SUPPLY REPORTIONG IN GSTR-1
- E Commerce GSTR1 & 3B how to file
- Internship/Academic shown in Salary Pay Slip of a Doctor
- TDS PROCEDURE ON SALE OF IMMOVABLE PROPERTY BY NRI
- Refund of 20%pre-deposit paid for stay application
- ASISSE return under the provisions of the Collection of Statistics Act, 2008 (7 of 2009)
- GST Cancellation without jurisdiction
- Legal Opinion on Registrar's Refusal to Investigate a Society for Non-Renewal and Non-Compliance
- GST Refund_RFD-01
- Form10BD was uploaded successfully without any Error but after 24 hours, Form10BE are not available
- Annexure B utility for GST Refund
- Tax amount diff in Gstr1 and 3B in tax compare reports
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
CAclubindia
