Hi, I have a case in which the client has a big some of money invested in FD of PMC bank which has defaulted. However the bank is paying TDS credit to all the accounts. So this year income from all other sources is 4 lakhs while income from fd interest from PMC is 6 lakhs. hence the TDS deposited is 60,000. now my Questions are
1) Should I show it as income in current year and claim TDS? or should I carry forward the TDS and wait for the year in which I actually receive the interest which is highly unlikely? Till how many years can I carry forward the TDS and under which section?
2) If I show it this year just to claim the TDS, I end up actually paying tax from pocket of Rs45000 on income which I may not receive (5% of 1lakh +20% on 5 lakhs = 1,05,000 Less TDS of 60,000). Incase I do this and after 4-5 years its certain that I am not receiving the money, can I claim a loss under other sources?
3) If I choose to carry forward, and suppose in the 5th year I get all the interest, then I understand I will be charged on maximum marginal tax rate on the entire income (otherwise I would have been charged around 20% slab rate). But dont you think, it is advisable to pay the extra 10% tax later rather than paying a tax on an uncertain income.
4) Can I choose to just claim the TDS this year and show only the TDS amount as income of this year? and whenever I get the interest, I show the reciept as income of that year and pay tax on it.
CAclubindia
