Interest on fd made in current account for a proprietor

Tax queries 261 views 3 replies

Dear All, I wanted to know,  as a proprietor of my printing business, I had created FD in current account.

I had taken OD on that FD. On 26AS , my entire interest earned is shown while I had paid interest, nearly 50% to bank on the SAME OD. In tax calculation of my business income, I had decided to go for presumptive scheme for Fin Y 16-17 which came to 6% on my turn over of 1 cr+= Rs 6 lakh. Now my FD interest shows Rs 2 lakh received in current account (cumulative) but I have paid almost Rs 1 lakh on OD on the same FD.  Can I include my interest income as part of my Total income as a proprietor ? i.e. when presumptive income is declared Rs 6 lakh (6% on sales) , will it be treated as included in profit since it is from my same proprietors account ?

If  it has to be treated as separate income , is there any such provision where I can show the actual net interest earned after deducting the interest paid on OD of the same FD ? I can produce bank's letter with charges.

Thanks , Regards , Himanshu

 

Replies (3)
As per me you cannot Setoff Interst of FD with interest of OD even if you given you FD as security fot the OD
6% income to be taken for inly turnover and not for Interest Income i.e 6L (6% of 1 Cr) + 2L (Interest Income) = 8L (Taxable income)

Thanks Ashwini, for the reply. Now for the current year (FY 17-18) to save myself from undue interest income under

the heading of "Other Income" , I shoud close all my FD accounts and put all the money (keeping short term business requirement aside) in good small cap/ mid cap equity fund which will actually earn me far more than 

keeping FD OD. I hope I am right.

You can do so but it is advisable to take advise from investment advisor because in FD there is no Risk but in MF risk is there, so analysis the market and then invest


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