Please Help: Query regarding deduction of TDS on accrued interest of NPA account
Posted Date : 10-Aug-2013 , 04:37:33 pm | Posted By CA Shraddha Vora
Brief Facts: -
A listed company has been declared as a “Non Performing Asset” (NPA), by a Financial Institution (FI), due to absence of timely payments to them because of shortage of funds.
NPA:-
An asset is Non Performing, when Interest and / or installment of principal remain overdue for a period of more than 90 days with effect from March 31, 2004, as per RBI Master circular.
Query:-
Since the account of the company has been declared as NPA, interest is booked by the FI on receipt basis (and not on accrual basis). However, the company has to provide for interest in the books of accounts on accrual basis.
The question is regarding deduction of TDS, while providing the interest expense.
1) Should the interest be provided for in the books?
2) If provided, should TDS be deducted on the same?
A listed company has been declared as a “Non Performing Asset” (NPA), by a Financial Institution (FI), due to absence of timely payments to them because of shortage of funds.
NPA:-
An asset is Non Performing, when Interest and / or installment of principal remain overdue for a period of more than 90 days with effect from March 31, 2004, as per RBI Master circular.
Query:-
Since the account of the company has been declared as NPA, interest is booked by the FI on receipt basis (and not on accrual basis). However, the company has to provide for interest in the books of accounts on accrual basis.
The question is regarding deduction of TDS, while providing the interest expense.
1) Should the interest be provided for in the books?
2) If provided, should TDS be deducted on the same?
Category : Income Tax | Answers : 1 | Comments : 0 | Hits : 200
Answers
Answer By: SUBHASH KUMAR JHA
As per AS-9 interest income is recognised on day to day basis even if it is not get paid so it will be provided in the books.
According to section 194A of income tax act tds will be deducted on Interest at the time of payment or credit whichever is earlier is it is > 10,000/5,000.
According to section 194A of income tax act tds will be deducted on Interest at the time of payment or credit whichever is earlier is it is > 10,000/5,000.
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