Interest Income and Interest Payments?

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

04 July 2011
Is interest on Fixed Deposits offered on accural basis to tax? What abt. Interest on recurring and saving deposits?

Is interest paid on housing loan, eligible for deduction on accural or actual basis?

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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05 July 2011 According to the mercantile method of accounting regularly followed by the assessee, interest on fixed deposits is required to be shown on accrual basis.
The same method is required to be followed for RDs BY APPLYING INTEREST RATE on product basis. However, in case of savings, it can be taken on the basis of amount credited in the pass book looking to the materiality aspect of accounting.
Interest paid on housing loan is eligible for deduction U/s 24 on accrual basis.
However, Section 80C is available on payment basis.

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