Ppf interest & balance sheet

A/c entries 10190 views 7 replies

Ramesh

Freelance writer

49 Points Joined July 2018

Dear Experts,

Since the PPF interest is exempt, I'm wondering if I need to record the PPF interest component accrued for the year (as per the passbook) or not.

I invested Rs 70,000 in Dec 7, 2017, and the March 31, 2018 PPF statement showed interest Rs. 1,330.00

Have 2 questions:

1. Do I need to add the total (PPF principal + interest) and add it in the Current Assets? If so what are the journal entries to be posted.

(or)

2. Can I skip reporting the interest part and show only the PPF Principal sum (added every year) in the B/Sheet. And when filing the ITR, can input the PPF interest under Exempted Income.

Thanks in advance for your insights.

Replies (7)

RAJA P M

"Do the Right Thing...!!!"

128116 Points Joined January 2015

1st option is correct...

You ll add the interest amount to the principal amount...

Journal :
1st
Dr. PPF A/c - Rs 1330
Cr. Interest on PPF A/c - Rs. 1330

2nd
Dr. Interest on PPF A/c - Rs. 1330
Cr. Capital A/c - Rs. 1330...

Ramesh

Freelance writer

49 Points Joined July 2018

Thanks for the response.

How do I categorize "Interest on PPF" in Tally. Does it fall under Current Assets or Indirect Incomes?

RAJA P M

"Do the Right Thing...!!!"

128116 Points Joined January 2015

Simply said;

No more effects if we book it under indirect income or (Current Asset). Bcoz, Already PPF deposit booked under Current Asset...

You can book the Interest under Income head*. But, After its transferred to Capital Account. So, No more effects in Income Value...

After You can deduct it under IT act.

Ramesh

Freelance writer

49 Points Joined July 2018

Got it! Thanks again sir.

Praveen Unnikrishnan

22 Points Joined September 2018

It is very important to know your Interest on PPF. You will find several calculator that will help you know the actual amount of PPF deposit maturity value & interest rate value.