23 April 2013
One of my client having business income. He is issuing entry (white entry) through bank account. He is charging @ .25% per 100 Rs. (cash) He take Interest Rs. 1 through cheque & take interest income & return cash of. 75paise in cash. All the transactions are through bank. Is it make any problem in future.
Is it compulsory to take interest on unsecured loan can we give loan (entry) without interest income..
23 April 2013
Generally no body will take entry without interest as such person would like to show expenditure in his books.
Generally there is no rule that individual have to take interest, however in case of corporate in assessment non-charging of interest is added as income. So on similar principle addition can happen hence it is advisable to charge interest.
Further most important is that in this type of transaction white entry can be given only of those amount which is shown as income less expenditure incurred. Generally people fail to consider normal lifestyle expenditure has to be reduced otherwise AO can ask for source of income through which cash is deposited
24 April 2013
I have already mentioned in last paragraph that the issuer of entry should have source to justify his income after expenditure as per his lifestyle.
CAclubindia
