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Interest free unsecured loan...

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(Querist)
19 April 2014 assessee wants to take interest free unsecured loan for three year. there is any income tax liabilities on loan provider and loan receiver under the income tax act..
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Nikhil Kaushik

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Nikhil Kaushik (Expert)
21 April 2014 loan receiver remains safe. However, the loan provider can face tax issues if he has interest bearing borrowings. will vary from case to case.
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K.M.CHANDRAN

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K.M.CHANDRAN (Expert)
22 April 2014 NO TAX LIABILITY ON THE BORROWER. NO TAX LIABILITY ON THE LENDER AS FAR AS THE LOAN IS CONCERNED.
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Nikhil Kaushik

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Nikhil Kaushik (Expert)
22 April 2014 Chandran,

there are case laws after case laws where additions to income have been made (vide disallowance of interest on borrowed funds) if interest free loans have been given.

please refer M/s Southern Bottlers Pvt. Ltd. ...Respondent CORAM: HON'BLE MR. JUSTICE HEMANT GUPTA for an example.
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