One of my client has got a receipt entry in Bank amounting to 50 lacs. He said me that he has received the amount as loan from a friend and the same will be repaid by him in parts.
My query is whether such transaction is allowed as per Income tax. There is no TDS deduction made on this transaction.
31 August 2021
Yes, such transaction is allowed in Income Tax. However, the assessee has to prove that such transaction is a loan and as the amount involved is Rs. 50,00,000. As per section 269T, he cannot repay such loan other than by way of ECS or Account payee cheque or any other electronic mode prescribed. However, take note of TDS provisions at the time of payment of interest
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