Interest on loans and advances
This query is : Open
Querist : Anonymous
Querist :
Anonymous
(Querist)
25 March 2016
Dear Experts,
For loans and advance what rate of interest needs to apply ?
is there any specific rate of interest is available in income tax ?
because i am charging 9% p.a. is it ok please advise.
For loans and advance what rate of interest needs to apply ?
is there any specific rate of interest is available in income tax ?
because i am charging 9% p.a. is it ok please advise.
25 March 2016
No specific rate of interest available for charging the interest on Loan & Advances in the Income Tax Act, 1961.
However if in rate of interest is charged in excess of prevailing market rate, then the income tax officer may disallow excess interest u/s 40A(2)(b). Moreover interest @ 12% pa is allowed as per income tax Act, 1961 u/s 40B on partner's capital.
However if in rate of interest is charged in excess of prevailing market rate, then the income tax officer may disallow excess interest u/s 40A(2)(b). Moreover interest @ 12% pa is allowed as per income tax Act, 1961 u/s 40B on partner's capital.
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