According to Table F of the Companies Act, 2013, when a shareholder fails to pay the call money by the due date, the company charges interest on calls-in-arrears at the rate of 10% per annum, unless the company’s Articles of Association prescribe a different rate.
This interest is charged from the date the call money became due until the actual date of payment. It serves as a compensation to the company for the delay in receiving the funds and acts as a deterrent against default by shareholders.
Journal Entry for Interest on Calls-in-Arrears:
When interest is received from the defaulting shareholder:
| Account Titles | Debit (₹) | Credit (₹) |
|---|---|---|
| Bank A/c | Dr. | xxx |
| To Interest on Calls-in-Arrears A/c | xxx |
Note: Interest on Calls-in-Arrears is treated as income for the company and is shown on the credit side of the Statement of Profit and Loss.