interest free loan

This query is : Resolved

apurva (Querist)
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07 November 2009 can a person give interest free loan to persons whose not having any blood relations with the loan taker, ie freinds, relatives, etc..?

CA.SHAHZAD SAYYED

CA.SHAHZAD SAYYED (Expert)
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08 November 2009 Dear Apurva
in case of Individual it does not matter but however in case of Firm & Co. they have to prove that there is no indirect benefit obtain by giving interest free loan

Rajnish

Rajnish (Expert)
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08 November 2009 My view is slightly different from above. Even in case of individual blood relation is very important. Many courts have given there view that for gift there should be blood relation. Hence in absence of blood relation it will be difficult to prove gift

Kishanlal Paliwal

Kishanlal Paliwal (Expert)
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13 November 2009 The query is initialised with regard to Loan, not to Gift and asked for the consequence for Interest Free Loan!

In the case of loan, chargeability of interest depends upon the parties enter into transaction.

However, in case of Firm or Company, it is required to disclose that no indirect benefit is derived on account of giving interest free loan.