interest free loan to karta

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This query is : Resolved

Rajkk (Querist)

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)

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)

01 November 2016 And if huf is also engaged in same business then?

Amol S Joglekar

Amol S Joglekar (Expert)

01 November 2016 please specify the nature of business, so as to give better answeer.

Rajkk

Rajkk (Querist)

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)

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)

01 November 2016 Ok thank you.

Amol S Joglekar

Amol S Joglekar (Expert)

01 November 2016 you are most welcome.

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