The interest on debentures is paid on:
(1)three months
(2)six months
(3)one year
(4)any time
Answers
the interest on debentures is paid on 6 months
(4) any time
Explanation:
An interest paid is an award to all the debenture holders for investing in the debentures of an enterprise. Usually, interest is paid in a periodical systematic manner at a fixed rate of interest on the face value of the debentures and is being treated as a charge on the profits.
When an enterprise circulates debentures, it provides interest on debentures at a fixed rate on its nominal (face) value payable quarterly, half yearly or yearly as per the terms of issue. This percentage is normally a part and parcel of the name of debentures like 8% debentures, 10% debentures, etc., and interest payable is computed at the nominal value of debentures.
Interest on debenture is a charge opposite to the profit of the enterprise and has to be paid whether the enterprise has acquired any profit. According to the Income Tax Act, 1961, an enterprise must deduct income tax at the recommended rate from the interest payable on debentures if it surpasses the guided limit. It is known as TDS or Tax Deducted at Source and is to be accumulated and deposited with the tax authorities. The debenture holders can allocate this amount against the tax that is due from them.