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Minimum interest rate for loans from relatives

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(Querist)
27 October 2013 Is there any minimum interest rate for loans from relatives to be charged as per income tax act?
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CA Pallav Singhania

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CA Pallav Singhania (Expert)
27 October 2013 In General there is no specified rate of Interest defined under IT Act on loan from relatives or on unsecured loans...
However, it depend upon the mutual agreement between them...
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Nikhil Kaushik

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Nikhil Kaushik (Expert)
27 October 2013 you may even lend at 0%. It won't hit you unless the lender is having interest bearing borrowings and he/she is claiming deduction for the same in the p&l. In such cases, Income-tax department often disallows a portion of interest paid.
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