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Tax Liability on Interest Arrears

Tax queries 258 views 1 replies

My mother and myself deposited Rs. 16.00 lacs and Rs. 8.00 lacs respectively in a small finance company at the interest rate of 18.00% per annum.

Firm is partnership concern and for the past 5 to 6 years, that firm not doing any business activity.

Till October 2015, we got interest regularly.

Later, due to some bad position, they did not paid interest.

But assuing to repay that entire amount with some interest.

My mother aged 72 and not assessee.

For FY2019-20, I submitted return with Zero tax liability.

For FY2020-21, I am going to submit online ITR without any tax liability as I did not have that much of taxable income.

If we realised that deposited amount with arrears of interest now (may be half or full), can we have to pay tax on such interest.

Could you please guide

Replies (1)
You can choose to offer the interest income on receipt basis but that would eventually mean higher tax outflow in one year.

ofcourse, tax shall be payable if your income exceeds basic exemption limit.


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