Nbfc interest @12% now want to reduce to 10%

This query is : Resolved

Aditi Chandak (Querist)
Follow

10 May 2014 nbfc co has borrowed money @12% in the year 2011 has regularly paid interest and deposited tds. Now lender wants to reduce the rate of interest to 10% retrospectively from year 2011 upto 31st march 2014.please suggest in accounting effect or otherwise in the accounts and TDS.

Nikhil Kaushik

Nikhil Kaushik (Expert)
Follow

10 May 2014 no need to give retrospective impact. consider the reversal as an one time impact in the books. with regards to TDS there is nothing to be done from the NBFC side.

Message likes : 1 times

Aditi Chandak

Aditi Chandak (Querist)
Follow

12 May 2014 Sir,
Thanks.I would like to have further clarity.
1)Can i treat this as an extraordinary income in current year as per AS-5.
2)If i do this then i dont pay interest to the lender in the current year, as i have already paid him excess in previous years. This means no interest,no tds deduction in current year. Is this possible?By doing this i am not contravening any tds provisions?

Nikhil Kaushik

Nikhil Kaushik (Expert)
Follow

13 May 2014 depends on how The NBFC structures this interest reduction. If it simply credits your account/refund the money, then it can be treated as an extra-ordinary item. In such a scenario, interest shall still be payable for next year and TDS provisions shall apply.

In case, the bank decides to adjust against the future interest liabilities, then you might just pass it off as no-interest paid position.

Aditi Chandak

Aditi Chandak (Querist)
Follow

14 May 2014 Thanks Sir.Thankyou for your guidance.

Nikhil Kaushik

Nikhil Kaushik (Expert)
Follow

14 May 2014 you are welcome Aditi...

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now

Join the CA Students WhatsApp Community for ICAI Updates, Trending Courses & Notes!

Similar Resolved Queries

Unanswered Queries

Popular
Recent

Trending Online Classes

Direct Tax Laws & International Taxation May 26,Sept 26 & Jan 27

CA Arvind Tuli

Enroll Now
Audit Fast Track Recorded Batch For May 26,Sept 26 & Jan 27

CA Aarti Lahoti

Enroll Now
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English

CA Bhanwar Borana & CA Shubham Keswani

Enroll Now

view all classess

Meet our CAclubindia PRO Members

SARAVANAN PALANISAMY

GST Karimnagar state

Darshan

Krishnamohan Gangaraju

CA Bijo scaria

Subscribe Now

Nbfc interest @12% now want to reduce to 10%

Similar Resolved Queries

Trending Online Classes

Meet our CAclubindia PRO Members

Quick Links

Browse by Category

Latest Job Openings

Senior Executive

Manager- Finance and Compliance

GST CONSULTANT

GST CONSULTANCY

Accountant

CA Final

Article Assistant

Associate CA