Interest accreition to corpus fund - accounting and tds treatment

Our company is in to business of managing serior citizens apartments, residents have contributed non refundable interest bearing corpus fund which can be used only for major repairs and maintance of apartment building, we will be accruing notional interest to corpus fund (not creiting to any indiviual ledger). these group of senior citizens will not have any registered associtation but acts through their committeee representatives....

My questions are below....

1. how to account these accrued interest.......

2. what about tds on enterest accured.....(as not creditting to any indiviual account or registred association)

regards

Ramesh N

9900156836

 

 

Replies (3)
Quick Summary
This discussion addresses the accounting and Tax Deducted at Source (TDS) treatment for interest accrued on a non-refundable, interest-bearing corpus fund contributed by senior citizens for apartment maintenance. The company accrues notional interest but doesn't credit individual accounts. Questions arise on how to account for this accrued interest and whether TDS applies, especially without a registered association. The advice suggests that if balance confirmations are issued quarterly, the interest is a determined liability, not a contingent one.

Dear Sir,

Please let us know whether the notional interest you are taking into account is on realisation basis in future or based on bank rate ?

You can post your query at psandac @ gmail.com 

Interest rate is fixed, also we are giving balance confirmation to committee of residents corpus fund + accrured interest minus expenses incurred....every quarter....

Whether Statutory auditor is right in considering this interest amount as contingent liability in audited financials....

It is not a contingent liability since liability is determined and fixed that you are giving balance confirmation.

Further contingent liability is always a noted to accounts. Once you account your liability in your books of accounts, the nature of contingent liability is goes away.

For more information, kindly drop email to psandac @ gmail.com 

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