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of <h1>State Financial Corporations May Switch Interest Accounting from Mercantile to Cash Basis, Pending RBI/IDBI Approval.</h1> The circular addresses the change in the method of accounting for interest by State Financial Corporations from the mercantile to the cash basis. Following a Supreme Court judgment, interest on sticky loans is taxable on an accrual basis under the mercantile system. However, if the Reserve Bank of India and IDBI deem the switch to a cash basis as legal and bona fide, the Income-tax Department may accept this change. The circular instructs all relevant officers to be informed of this update, with a Hindi version to be provided later.
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