Loan without interest

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

19 December 2016 1. I want to give Rs 20 Lacs thru online bank transfer as an interest free loan ( unsecured loan ) to my friend.

a. My friend wants to pay back the whole amount in cash in EMI ( less than Rs 20000 ) for next coming months, is this the right way if I have given thru online mode can he payback all EMI in cash mode?

2. Will there be any IT scrutiny on me or my friend?

3. If interest free loan is not allowed to friend then what is minimum interest rate?

4. What is minimum or maximum tenure for which loan can be given to my friend ?

5. Is there any penality clauses if this comes under IT scrutiny?

C.A. Mayur J. Raiyani

C.A. Mayur J. Raiyani (Expert)
Follow

19 December 2016 i am answering on a presumption that loan given is a person loan i.e. end use of loan is personal.
1. Yes but less than 20k in a year
2. If you have interest bearing loan then you are not supposed to give interest free loan. Based on this proposition you may and or your friend can be scrutinized. (not 100% this happen)
3. Near or more than SBI or nationalized bank rate
4. No such period (but 5 to 15 yrs in case of personal loan is rational in my view)
5. If you fall under point 2, then Best Judgement by AO (nationalized bank rate int) addition to your income.
Above scenario changes in case of business loan, better to consult with Your consultant as discussion becomes elaborate.

Querist : Anonymous

Querist : Anonymous (Querist)

19 December 2016 Thanks alot Mayur.

Just want to clarify. Didnt understand the point 1 that its Rs 20K per month or Rs 20K per year.

Can I accept every EMI in cash ?

C.A. Mayur J. Raiyani

C.A. Mayur J. Raiyani (Expert)
Follow

20 December 2016 already mentioned in point 1, ya u can accept in EMI

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