Interest Income and Interest Expenses

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Bhavik (Querist)
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10 April 2011 Hi,

Assessee has income from 3 sources a) Interest income from unsecured loans b) Rent income from let out property and c) LIC commission income. Rent income will be assessed under income from house property.

1. But under which head will interest income and LIC commission income will be assessed? Can Interest income and Commission income be assessed under PGBP?

2. Can he claim interest expenses against interest income?

3. How much expenses can be claimed for LIC commission income?

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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10 April 2011 1. But under which head will interest income and LIC commission income will be assessed? Can Interest income and Commission income be assessed under PGBP?

LIC Commission : PGBP
Interest Income: IFOS

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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10 April 2011 2. Can he claim interest expenses against interest income?

Yes.

3. How much expenses can be claimed for LIC commission income?

Genuine and reasonable amount which can be substantiated during the assessment proceedings can be claimed.

In case LIC Commission is below Rs 60000/- adhoc deduction for expenditure can be claimed -

Commission on 1st Year Premium & FRP 50%
Commission on Renewal Premium 15%

Bhavik

Bhavik (Querist)
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10 April 2011 Thanks a lot for the reply.

There is one more doubt.
Situation 2: Assessee has income from Salary and Interest income. As stated earlier interest income will be assessed under IFOS and interest paid against the same can be claimed as expenses.

What is the cap on claiming this interest expense? Can it exceeds interest income. If yes, then can it be set-off against salary income for the year?

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