Loan to friend - legal procedure

This query is : Resolved

Satish Makam (Querist)
Follow

05 May 2012 I am, in individual capacity, giving loan to one of my friends Rs. 2,00,000 in cash.

Now what documents(like stamp paper/promissory note) i need to get prepared. Is it legally enforceable for repayment in case if he does not pay.

Please describe in detail.

thank u in advance.

CA Tousif Ahmed

CA Tousif Ahmed (Expert)
Follow

05 May 2012 As per sec 271D Minimum penalty of loan/deposit accepted in contravention of Sec.269SS shall be levied.
Sec.269SS provides that if the amount of loan/deposit or the aggregate amount of such loan/ deposit is Rs.20,000/- or more then the same shall not be taken/accepted otherwise than by an account payee cheque/account payee draft.

You can give such loan by account payee cheque / account payee draft only but not in cash.
you can prepare agreement on stamp paper.

Surrender

Surrender (Expert)
Follow

06 May 2012 Under Civil Laws, Receipt, Promissory Note, Agreement to repay would be required to prove your case for recovery of debt, if remains unpaid;

Surrender

Surrender (Expert)
Follow

06 May 2012 It would be still better if you obtain an undated cheque for repayment of the loan amount, which can be useful for criminal case under section 138 of N.I.ACT if it is dishonoured by his Bank on presentation

Satish Makam

Satish Makam (Querist)
Follow

08 May 2012 I dont bother of Income tax act. can u tell me with out referring Income Tax Act.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now