ramprasad (MBA) (77 Points)
20 March 2014Are chit fund dividends taxable ? If i face loss at the end of 3 year chit period, can the monthly contributions over the previous 2 investement years can be taken as expense.Are the monthly chit installements or contributions treated as normal expense or loan expense ?
D VARA PRASADA RAO
(Student (Articles Completed))
(173 Points)
Replied 21 March 2014
Yes.....Chit Dividends are taxable.... and you can cliam the bid loss at the time of lifting the chit can claimed as expense.
Otherwise......Transfer all the Dividends received for the entire chit period to a Chit Dividend which is under liabilities side of the Balance Sheet and then At the time of Lifting the Chit you have to debit the Bid Loss to the same account and the net balance will be the loss or profit on the chit which is to be transferred to P&L, and taxed accordingly.
In my opinion the second method is more reliable and explanatory.
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