Interest Accrued

@ sandeep: i don't have any practical experience but as far as my book knowledge

Bank a/c or Interest receivable a/c/ FD a/c dr        257195
TDS a/c dr         64300
     To Interest a/c     321495


Interest a/c dr    321495
    To p&L a/c       321495

Income Tax a/c dr 64300

    To TDS a/c                                      64300

P & L a/c Dr      [Whole Tax incl TDS]

 To  Income Tax a/c               [Whole Tax incl TDS]

IF INTEREST IS PAYABLE ON THE MATURITY

INTEREST RECEIVABLEAC/ FDR AC.- - - - -- - - DR.257195

TDSAC- - - - - - -- - -  -- - - - - DR.64300

         TO INTEREST INCOME   321495

TDS IS NEVER AN EXPENSE CHARGABLE TO P AND L AC.

IN MY OPINION,

ACCRUED iNTEREST A/C DR. 321495

   TO iNTEREST                                321495

THEN,

FDR A/C DR.  257195

TDS A/C DR.   64300

  TO  ACCRUED INTEREST        321495

THEN,

 CASH/BANK A/C. DR. 5257195

 TO FDR                                5257195

AND TDS WILL BE SHOWN AT ASSETS SIDE AS BALANCE WITH REVENUE AUTHORITIES UNDER THE HEAD LOANS & ADVANCES AND THIS ENTRY WILL BE DIVIDED INTO 3 PARTS FOR 3 YEARS

As Bank will never deduct all the TDS amount in one time, bank liable to deduct tax @ 10% as TDS. And Mr. Aaditya is right that you have to record/book interest amount as your income on accural basis. If you are individual then i would suggest you to show your this income year wise accural basis to avoid tax burden in final year as you can show all the interest amoutn in final year but bank will deduct your TDS year wise and @ 20% if you dont have PAN.

Hi   Anshu............

     You are credited interest twise..so i think it will be wrong....bcz in your point of view  interest amount will be Rs 321495 +Rs. 321495                   is it??

as discussed earlier the simple entry shall be

Interest Accrued on FD/ Fixed Deposit A/c    Dr...        2,57,195.00

TDS on Interest                                                  Dr...            64,300.00

                 To Interest Income                                                                   3,21,495.00

Interest Accrued & TDS Shall be Loans & Advances
Interest Income Shall be Income T

Thanks & Regards

Originally posted by : Adityakumarhv
	On Accrual basis 1) For Interest accrued  for year 1st ( for next 2years also same entry has to be passed)        Fixed Deposit    A/C......Dr  85732        TDS receivable A/C......Dr  21433               To Interest A/c                            107165   2) In year 3rd  year after maturity of FD Cash or Bank A/C......Dr   5257196     To Fixed Deposit A/C                     5257196     On receipt basis Interest has to be recognised in year 3 only after receipt of  FD

321495 is one year interest how can you devide into 3 parts?

on 50 lakh if we take minimum 8% interest than interest will be 4 lakhs per annum

regards

future ca

Originally posted by : Adityakumarhv

thanks for modifying the message

The Accounting Entry shall be-

01. Interest Receivable A/c......Dr.  ( 321495-64300)

      TDS A/c....Dr                                    64300

             TO interest received A/c                      321495.

in my opinion as below u can pass the entry

DR Interest accured but not due Rs. 257195 Assets Account

DR TDS Receivable Rs. 64300 Assets Account

CR Interest Earned Rs. 321495 Income Account
 

As you all are confusing him as per my view of point, the entry should as per Form 16A which will be issued by the BANK. at the end of every Financial Year. Interest part should be recorded as per FORM 16A. Whatever amount in Form 16A, the entry should be as follow:

Interest Accrued on FDR A/c (Current Assets)    Dr     1000  (For example)

TDS Receivable (Current Assest)                         Dr        100  (For example)

To Interest received on FDR A/c                           Cr             1100    (For example)

I hope now you all dont have any query remain. This practice is used if you go with accural basis which follows by the corporates but in case of individual you can adopt both the basis i.e. Cash Basis or Accural Basis.

I would suggest you that follow the accural basis to avoid tax liability in final year if you have FD for 3 year or more as by using accural basis tax liability divides in every year.

bank a/c                dr.......    257195

tds a/c                    dr.........64300

   to interest on f d                             321495

only a simpla enrt should be passsed

and another rhing is that tds must be 10% on interest other than securities

another entry of interest accured must be passed before recipt of interest

interest on f d a/c dr.       321495

        to interest a/c                   321495

According to me the above problem you have to do as accrual basis, because Bank will deduct TDS as per your income accrued.