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Taxation of interest income

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Atharv Sankliya

1359 Points Posted on 13 April 2023

on which basis income from interest is taxable received basis or due basis

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Quick Summary

This discussion clarifies the taxation of interest income, focusing on whether it's taxed on a received or due basis. Generally, in India, interest income is taxed on an accrual basis, meaning it's taxable when earned or due, even if not yet physically received. This applies to fixed deposits and bonds. The conversation also touches upon scenarios where an assessee uses cash basis accounting.

NARENDRA

ACCOUNTS MANAGER

2213 Points Posted on 13 April 2023

Received Basis , ..... ......... but if you given a loan or making fixed deposit in bank, they are credited you interest, but not paid .....on that particular time you will have to club that interest in income .

Akash A

100 Points Posted on 13 April 2023

Depends upon circumstances

Atharv Sankliya

1359 Points Posted on 17 April 2023

Circumstances like?

Pranjal Gupta

141 Points Posted on 17 April 2023

In India, income from interest is generally taxable on an accrual basis, i.e., it is taxable in the year in which it accrues, and not on a received basis. The accrual basis means that the income is taxable when it becomes due or is earned, irrespective of whether it has been actually received or not.

This means that if you have earned interest on a fixed deposit or a bond in a particular financial year, the interest income will be taxable in that financial year, even if the interest has not been credited to your bank account or received in cash.