Question

Write a Letter for Payment of interest

Answer 1

Deposit is a borrowed capital. The depositor is an unsecured creditor of the company. Return in the form of interest is periodically paid by the company to the depositor This letter is sent by the company to the depositor when interest on deposit becomes due. This letter gives a reference to deposit receipt, amount of deposit, rate of interest, the gross amount of interest, TDS deduction and net amount payable. It also contains information about the interest warrant which is sent to the depositor along with this letter.

Sunrise Industries Limited

60/A, V S. Khandekar Road,

Vile Parle (W), Mumbai - 400056.

web: http:7/www SunIndco.in

Tele: 022-61246871

Ref. : D 38/2012                                      18^th April 2012.

Mr. Sadashiv Mahadik

Sundar Niwas, Opp: International School,

Manpada Road, Dombivali (W) - 421202

Sub: Payment of interest

Dear Sir,

We are enclosing herewith interest warrant No. 3356 dated 16^th April 2012 drawn on Indian Bank, Dombivali Branch, for Rs. 18,000/­-

Details of interest payment on your deposit are given below:

Interest warrant No.	Receipt No. A/c No.	Deposit amount	Rate of Interest	Gross amount of interest	T.D.S. @ 10%	Net Amount
3356	2465	Rs.2,00,000/-	10%	Rs.20,000/-	Rs.2000	Rs.18000/-

A TDS certificate is enclosed for income tax purposes along with an interest warrant.

Thanking You,

Yours faithfully,
For Sunrise Industries Limited
 Sd/­-
Secretary

End - Interest warrant
TDS certificate                                                                     

NOTE: 
Tax Deducted at Source (TDS): TDS means tax deducted at source: The company deducts this TDS at the time of payment of interest. Under the Income Tax Act, 1961, the tax will be directly deducted at source from the interest payable on the public deposits and the net amount of interest will be payable to the depositors. TDS is to be deducted at the rate of 10% if the amount of interest in a financial year exceeds 10,000 (except listed Indian companies). If PAN No. is not given then the double amount is deducted as TDS. i.e. 20%.