Question

Draft a letter to a depositor informing him about payment of interest.

Answer 1

Deposit is a borrowed capital. Depositor is an unsecured creditor of the company. Return in 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 reference of deposit receipt, amount of deposit, rate of interest, gross amount of interest, TDS deduction and net amount payable. It also contains information about interest warrant which is sent to the depositor alongwith 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 8/2012                                                 18^thApril,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 200000/-	10%	Rs 20000/-	Rs 2000	Rs 18000/-

TDS certificate is enclosed for income tax purpose along with 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, tax will be directly deducted at source from the interest payable on the public deposits and 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 double amount is deducted as TDS. i.e. 20%.