Treatment of interest not charged by bank

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Querist : Anonymous

Querist : Anonymous (Querist)

27 November 2014 When an account becomes NPA the bank does not charge interest to the account. What is the treatment of this unapplied interest by bank in the books of the borrower.

Rupesh Jain

Rupesh Jain (Expert)

27 November 2014 you take a/c statement from the bank. when bank charge intt. then you make entry of that.

Querist : Anonymous

Querist : Anonymous (Querist)

27 November 2014 If in FY 2013-14 interest is not charged at all because the account was NPA full year then what to do?

CA Kumar Mukesh

CA Kumar Mukesh (Expert)

27 November 2014
Amt of Interest not charged by Bank by following RBI guideline it does not means no amount of Interest will be charge by the bank.

You need to book your expenses as per normal accounting practice.

Querist : Anonymous

Querist : Anonymous (Querist)

27 November 2014 But what would be its treatment in income tax because there is no proof for the interest expense

CA Kumar Mukesh

CA Kumar Mukesh (Expert)

27 November 2014
In Income Tax, Please consider section 43B, require that interest payable to bank or financial institution etc. are allowed only when its paid on before the date of Filling of Return of Income.

Dont confused between treatment of Interest under Income Tax And Companies Act

Earlier Treatment was as per Companies Act
This is as per Income Tax

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