Can a company accept deposit from its distributors?

This query is : Open

Kenil Satra (Querist)
Follow

09 December 2019 Can a private limited company accept deposit from its distributors? If yes, then what interest should the company pay on such deposit and how much TDS shoud be deducted on the interest paid?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
Follow

09 December 2019 Yes, can be accepted. Charge 12% interest and deduct 10% TDS.

Devershi Gupta

Devershi Gupta (Expert)
Follow

10 December 2019 There are various information that I need to know to give a correct view on the said issue, Since your question is vague in nature please check the following table for suitable answer:
1.) Shareholder: Yes, can accept, but subject to the condition specified in deposit Rules
2.) Director/Relatives of Director Yes, can accept, but the director/relative will give a Declaration in writing that money is not given out of borrowed funds and company will disclose it in the Board’s report.
3.) Employee: Yes, can accept up to the employee’s annual salary ( there should be a contract of employment with the company) in the nature of non- interest bearing security deposit.
4.) Any other Individual: Can’t accept because it is prohibited by the definition of Private Company.
5.) Proprietorship Firm: Can’t accept because it can’t be director, Member or relative of Director.
6.) HUF: Can’t accept because it can’t be director, Member or relative of Director.
7.) Partnership Firm: Can’t accept because it can’t be director, Member or relative of Director.
8.) Any Company: Yes, can accept, but also comply with Sec 179(3) wherein the conditions are specified for the lender
9.) Banks: Yes, can accept
10.) Trust: Yes, can accept, but loan received should be non- interest bearing.
11.) Outside India: Yes, can accept, but subject to the provisions of the Foreign Exchange Management Act, 1999 and rules and regulations made there under.
12.) Govt. organization ( eg. SIDBI): Yes, can accept
13.) Any other Financial Institution which are not incorporated as Banks (eg. Religare, Fullerton, Barclays, Bajaj Finance): Yes, can accept

Just by simple look on your matter, I can say you can not take deposit from your distributors. But please check this list yourself. If your case falls under any given scenarios.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now

Join the CA Students WhatsApp Community for ICAI Updates, Trending Courses & Notes!

Similar Resolved Queries

Unanswered Queries

Popular
Recent

Trending Online Classes

Direct Tax Laws & International Taxation May 26,Sept 26 & Jan 27

CA Arvind Tuli

Enroll Now
Audit Fast Track Recorded Batch For May 26,Sept 26 & Jan 27

CA Aarti Lahoti

Enroll Now
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English

CA Bhanwar Borana & CA Shubham Keswani

Enroll Now

view all classess

Meet our CAclubindia PRO Members

RAJ SANKLECHA

Pushkar Nagda

sachingurav

R.Prashanth

SUBASH CHANDRA BOSE

Subscribe Now

Can a company accept deposit from its distributors?

Similar Resolved Queries

Trending Online Classes

Meet our CAclubindia PRO Members

Quick Links

Browse by Category

Latest Job Openings

Senior Executive

Manager- Finance and Compliance

GST CONSULTANT

GST CONSULTANCY

Accountant

CA Final

Article Assistant

Associate CA