Tds on fixed deposit
venish ladva
(Querist) 25 April 2013
This query is : Resolved
sir,
what is accrued interest?
how to calculate it??
when we have to make entry for tds in books??
what is the accounting entry for accrued interest???
whether we have to reverse entry for accrued interest in next FY ??
thanks in advance
Rajendra K Goyal
(Expert) 25 April 2013
Accrued interest is the interest due but not paid. It is calculated in the normal way for a particular span say monthly or quarterly. Most of the Banks are having suitable software to look after all the aspects of TDS on accrued interest for Term Deposit. Manually, If you wish, with a Term Deposit Account you may also open a proforma interest account. Credit this proforma account with interest accrued quarterly or so and debit TDS from it, deposit with taxation deptt. Next quarter the interest on the principal will remain same, only interest on balance of the accrued interest account need to be calculated and on both the interest (On Principal and Accrued interest till date less TDS paid) Total TDS less already paid is calculated and paid.
Alternately you may keep this in a running account i.e. credit periodically the interest in the account and debit TDS from it and pay. On maturity pay the balance of the account.
DILIP KUMAR AAGARWAL
(Expert) 26 April 2013
I agree with Reply given by Sri Rajendra Kumar Goyal. I like to add something when question of TDs is arise then you must have a TDs certificate and you will get the amount of accured interst in the TDS certificate. So add the Interst amount with the amount of fixed deposite and deduct the TDS accordingly entry will be entered in the books. there is no qusetion of reverse entry of accured interst becouse when the your Fd is mautured then maturity amount and the amount of FD togather with the accured interest will be same and so credit the FD amount along with the accuded amount of interst and debit the maturity cheque.
Ganesh babu
(Expert) 15 May 2013
accrued interest means interest earned but not received as per AS9 interst can be recognised on time proportion bases
you have to pass tds receivable entry
and also pass receivable entry and cancel this entry when ever u receive payment from bank
