interest free loan to karta

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Rajkk (Querist)
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01 November 2016 Can huf take a overdraft and give that amount as interest free loan to karta for business. What will be the treatment of interest paid for such loan.

Amol S Joglekar

Amol S Joglekar (Expert)
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01 November 2016 Yes. That can be done.
If HUF is having a business of giving loan, then the interest paid on over draft can be claimed as allowable expenses.

Rajkk

Rajkk (Querist)
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01 November 2016 And if huf is also engaged in same business then?

Amol S Joglekar

Amol S Joglekar (Expert)
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01 November 2016 please specify the nature of business, so as to give better answeer.

Rajkk

Rajkk (Querist)
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01 November 2016 Karta is engaged in trading of food grains and gets compulsory audit ,karta also shows business income under pts @8% from trading activity.

Amol S Joglekar

Amol S Joglekar (Expert)
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01 November 2016 The business of HUF is NOT that of giving loan. So, the interest on overdraft wont be allowed as expenses.

Rajkk

Rajkk (Querist)
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01 November 2016 Ok thank you.

Amol S Joglekar

Amol S Joglekar (Expert)
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01 November 2016 you are most welcome.

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