Interest on calls in arrears and calls in advance is an important topic in company accounts. In this guide, we will understand the meaning, interest rates, formulas, accounting treatment and simple examples for both calls in arrears and calls in advance.
What are Calls in Arrears?
“When a shareholder pays an amount before it is called by the company, the amount is treated as Calls in Advance.”
Interest: As per Table F (Schedule I, Companies Act 2013) — chargeable @ 10% p.a. from due date till date of payment.
What are Calls in Advance?
When a shareholder pays an amount in excess of what has been called, the excess is treated as Calls in Advance. It is a liability shown under Other Current Liabilities until the call is made.
Interest: As per Table F — payable @ 12% p.a. from date of receipt till date the call falls due.
No voting rights and no dividend on Calls in Advance.
Swathika B is an MBA graduate in Finance & Business Analytics , the founder of The Commerce Lab. With a strong academic foundation in B.Com BFSI and hands-on experience in financial analysis, data analytics, and business studies, she created this platform to make Commerce and Accountancy simple, practical, and exam-ready for students across India.