Adjustment of payments against principle and interest
KL EP
(Querist) 06 December 2017
This query is : Open
Dear Sir,
I need to understand your views for a co-operative society based in Mumbai, India. Under the Maharashtra co-op society laws under by laws no 72 its states that society is required to charge simple interest on the payments. However it is not clear when such payments are made in partial amounts how to split the payment towards principle and interest component. I have asked some CA's and Lawyers and have got mixed response.
so my query is as below, In an event of partial payments towards society dues comprising of principle and interest. will the partial payment be adjusted towards interest firs and then balance left any from the payment is adjusted towards the principle or the reverse i.e. partial payment made are first adjusted against interest and balance left if any are adjusted towards interest.
so for example if the combined dues payable is 1 lakh and member pays 40 thousand one shot payment , how to adjust against the dues of 1 lakh between principle and interest, in the next cycle member continues to make small payments like 1000, 2000 sporadically.
Thanks
Isaac Gabriel
(Expert) 11 December 2017
Every remittance to be charged to interest, and the balance to be credited to principal. This is the recovery procedure against all loans and advances.
