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Loan

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Querist : Anonymous

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Querist : Anonymous (Querist)
26 May 2010 Hi Friends


I have urgent query about Loan. One of the company employees requesting for personal loan from company, presently he is drawing more then one lakhs. Please tell as per law (as per IT Dept and Company Law)can company allow loans to employee? If it ok then what is the limit? Can we charge interest? If employee unable to reimburse loan then how to recollect to them?
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Rasesh

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Rasesh (Expert)
26 May 2010 Loans can be given to employees who are not directors. There is no specific limit under the law. Rate of interest and other terms may be decided by the company as per its internal policies. For re-collecting as well, the company may have its own policies.
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Querist : Anonymous

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Querist : Anonymous (Querist)
27 May 2010 Hi Sir

Thank you, is this taxable to employee? or Company?
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Rasesh

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Rasesh (Expert)
27 May 2010 The loan would be treated as a loan only and not a perq. Hence, the question of taxability on the company or the employee does not arise.
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