The Hindu : Business / Tax Forum : Liability arises on the date of accrual

Online edition of India's National Newspaper
Monday, Nov 05, 2007

Business

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QUESTIONS & ANSWERS

Liability arises on the date of accrual

I have deposits in various schemes in the post office including senior citizens' scheme. Post office invariably credits my account after due date for receipt. Some of the credits fall in a succeeding year. Since I am following cash basis, I can probably pay tax by treating the date of credit in my pass book as date of actual receipt. Am I right?

Interest should be credited on the date of accrual. The occasion for some of the credits going to next accounting year should not arise at all. If there is a mistake by postponing the dates, that should not justify postponement of liability even under the cash system of accounting, because the amount has already accrued and should have been credited to the assessee's account. If there is a mistake, it will have to be rectified or ignored, since no advantage can be taken of such mistakes.

S. RAJARATNAM

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