Loan from a private lt company in which i'm director

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

16 May 2012 I'm planning to withdraw the profit of a compay(Money lending comp.) in which i'm the director and hold less that 10% share holding.This is a closely held company maintained by the family members.
Do we have any issue in case if i fail to repay the money taken from the compay in form of loan.

Is there any other way where we can withdraw the profit money and use it for personal purposes.

Amol Gopal Kabra (CA,CS,DISA)

Amol Gopal Kabra (CA,CS,DISA) (Expert)
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16 May 2012 There might be issues if you take it as a loan and then dont repay it. Anyways it will be taxable in your hands. Even if you are not liable for deemed dividend, you'll be taxed for the amount received as liabilities no more payable. So the way you are thinking to withdraw is not suggested. Its better if you can withdraw the amount by way of declaration of dividend by the company. This way the company shall need to pay Dividend Distribution Tax.
If you are working director of the company, you can take remuneration from the company. There is no bar on remuneration to directors of private limited companies.

Sumti Bhadani

Sumti Bhadani (Expert)
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16 May 2012 Agree with the above expert.

Querist : Anonymous

Querist : Anonymous (Querist)

16 May 2012 Thanks for your suggestion gopal.How much maximum amount I can take as remuneration from the company?
I have been as a director from the past 2years.Can you also suggest if the are any other ways where we can withdraw money from the company where repayment can be avoided.
Is this remuneration taxable?

Previously i have 25% share in the company and we made it to reduce to less than 10% to avoid deemed divident.

Thanks in advance

Amol Gopal Kabra (CA,CS,DISA)

Amol Gopal Kabra (CA,CS,DISA) (Expert)
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16 May 2012 There is no limit for maximum remuneration to a director in a private limited company.

Querist : Anonymous

Querist : Anonymous (Querist)

16 May 2012 Thanks for you very quick response.
I have 2 last questions :-).
1) Is this remuneration taxable.
2) Are they any other means by which we can withdraw money from the company and repayment can be avoided.

Amol Gopal Kabra (CA,CS,DISA)

Amol Gopal Kabra (CA,CS,DISA) (Expert)
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16 May 2012 Yes. This remuneration is taxable but at lower rates as compared to a company. There are no other legal means by which you can withdraw money from the company.

Querist : Anonymous

Querist : Anonymous (Querist)

16 May 2012 Thanks gopal.