Loan from friends or family member

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

08 August 2012 Hello Experts,

if we(as a P firm or proprietary concern) accept loan of Rs 100,000/- from friend or relative in cash can we claim its interest as expenses or not? or it is mandatory to accept loan in banking rout cheque etc.

Thanks.

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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10 August 2012 Firstly Section 269SS of the Income Tax Act prohibits accepting loans in cash in excess of Rs. 20,000.

If you accept loan amounting to Rs. 1 lakh in cash, penalty equal to Rs. 1 lakh shall be levied on you.

Interest paid on such loan shall be allowed as deduction subject to the provisions of Section 40A(2).

Querist : Anonymous

Querist : Anonymous (Querist)

10 August 2012 Thanks sir

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