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Tax implications on reimbursed interest by bank

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Yasaswi Gomes new

Finance

3350 Points Posted on 25 November 2023

Are corporate taxes are paid in 1 year arrears?

If so some last year interest is reimbursed by bank back to company.

Interest has tax allowance. When its returned what will happen to the allowance cause you have already claimed it. Can we restate last year statement or make adjustment this year??

Txs

Replies (2)

Quick Summary

This discussion clarifies the tax treatment of interest reimbursed by a bank. Corporate taxes are generally paid on an advance basis, not in arrears. If a bank refunds previously charged interest, it's typically treated as income in the year it's received. If the interest was previously claimed as an expense, tax rules may require adjustments. If it was capitalised, the asset cost should be adjusted instead.

sabyasachi mukherjee

Profession

19978 Points Posted on 26 November 2023

Yes they are paid as corporate taxes.

Aashok Kumar Sharma

Finance/Compliance Consultant

75663 Points Posted on 08 November 2026

Interest reimbursed by a bank later:

• Corporate taxes aren't paid "in arrears". Advance tax is paid during the year, with the final tax on filing. Interest reimbursed later by a bank (e.g. excess interest charged in an earlier year and refunded now) is income in the year received (if it was deducted as an expense earlier, Sec 41(1) taxes the remission or refund in the year of receipt).

• If the interest wasn't claimed as an expense earlier (e.g. capitalised), adjust the asset cost.

• Report it as other income in the year received.