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Interest on saving account for project where loan AMT is credited

P nh chandra (Job) (66 Points)

17 December 2020

We received JICA loan for mthl project. They give loan amount to us in saving bank of india as per their condition. On this saving account we received interest how it is treated. Whether to be netted of from cost of project or to be shown as a income?

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Triveni Patil (257 Points)
Replied 17 December 2020

Other income

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ayusmita (Tax consultant) (5885 Points)
Replied 17 December 2020

Income from other sources

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P nh chandra (Job) (66 Points)
Replied 17 December 2020

Pls explain me , as per accounting standarad

ayusmita (Tax consultant) (5885 Points)
Replied 18 December 2020

When you keep money in saving account

Bank paid you interest on that money which you kept in their bank in saving account

It is calculated in daily basis and credited to you at the end or middle of the each quarter or half of the year

Income earned from the interest from saving account is known as or treated as income from other sources

And it is deducted upto 10000 under 80TTA and the excess is taxable

Hence it is a savings account and loan amount is credited your bank is giving you interest as per the amount you have in your savings account . Interest credit will be treated as income from other sources

Interest debited is treated as interest payments towards loans

I think this type of loan have moratorium period of 10 years.

yasaswi gomes (My grammar is 💯 good I) (7290 Points)
Replied 18 December 2020

Use borrowing costs standard for both IndAS and AS 16 which ever standard your following becuz you can capitalise the costs as long as the project is ongoing and expense when there is a halt in the project. Also check if the scope is allowing your project costs to be capitalised.

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