Subhash chandra Pratihar 25 December 2020

income tax on interest

Div bench high court Calcutta decreed 6% simple interest on principal amount of RS 1797656.from31may 2003 to24april2020within 60days from 22ND July.it is also decreed that if not paid within 60days the respondent shall pay up simple interest 12%on principal amount till the date of payment.question remains income tax deducted for princle amount being arrear salary,penal interest amount taxable or not? if taxable can it be calculated on yearly basis from 2003to 20021?thank you in advance.prod Dr SC pratihar/drscpratihar@Gmail .com

Reply Follow

4 Replies

Dr J C Vashista (Advocate) 26 December 2020

What was the case where the court has considered and decreed the amount ?

It would be better to consult your lawyer for advise and necessary proceeding.

Subhash chandra Pratihar 26 December 2020

thank you sir,arrear salary rec'd tax deducted.this money suit for delay in payment of decretal amount. Hon'ble high court granted 12% interest in appeal।I searched interest awarded by high t liabale to pay tax ,। article by Govinrajan Dr advocate &expert.

P. Venu (Advocate) 27 December 2020

In the light of the facts stated, in my understanding, the interest decreed by the Court does not constitute an earning, hence not liable for income tax.

Dr J C Vashista (Advocate) 28 December 2020

Interest earned on arrears of salary shall attract tax as per law.

It is better to consult and engage a local prudent chartered accountant / taxation lawyer for better appreciation of facts/ documents, professional advise and necessary proceeding.