Red ink interest

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CA. PABITRA MOHAN

CA. PABITRA MOHAN (Querist)

14 November 2008 What is meant by Red ink Interest?

CA. Dashrath Maheshwari

CA. Dashrath Maheshwari (Expert)

14 November 2008 When an account current is balanced, and contains items which
are not due at the date of such balancing, there arises a case of what is called red ink interest.

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CA. Dashrath Maheshwari

CA. Dashrath Maheshwari (Expert)

25 January 2011 In an Current Account, interest is calculated on the amount of a bill from the date of transaction to the closing date of the period concerned. In case the due date of the bill falls after the closing date of the account, then no interest is allowed for that period. However, it is customarily followed that interest from the date of closing to the due date is written in red ink in the appropriate side of the Account Current. This interest is called Red-Ink Interest. This Red-Ink interest is treated as negative interest.

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