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Interest on loan provided by the directors of company.

This query is : Resolved 
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(Querist)
26 April 2013 Can anybody suggest me about compliance regarding the interest to directors on the loan provided by them. Do we require to pay any interest to directors of the company on the loan provided by them? what compliance should be taken into consideration.?
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VISHRUT

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VISHRUT (Expert)
26 April 2013 You can provide interest if you want to there is no compulsion on the same.

However if you are making payment following compliance is required to be taken care of

(1) Section 40A(2)(b) :-
The rate of interest should not be higher than the market rate currently prevailing.

(2) Board Resolution is required to be passed for the payment towards interest and it had to be approved in meeting.

(3) Disclosure requirement under AS - 18, 269 SS / 269T , 40A(2)(b) and CARO Reporting (if Applicable)
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V K Bajaj

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V K Bajaj (Expert)
27 April 2013 and (4) To apply TDS factor on interest income...
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