Sec 185 and 186
This query is : Resolved
19 January 2026
Sir,
A pvt ltd company no expenses and no incomes ,share capital was introduced and later the director withdraw amount from bank.so the situation is
trial balance
share capital 10 lakh credit
Director Loan 9.65 lakh debit
how to show this director loan in books as it is debit balance and if small company has any exemption to 185 AND 186,also how to report in audit report.The company has neither accepted any borrowings nor any payments.pls help
A pvt ltd company no expenses and no incomes ,share capital was introduced and later the director withdraw amount from bank.so the situation is
trial balance
share capital 10 lakh credit
Director Loan 9.65 lakh debit
how to show this director loan in books as it is debit balance and if small company has any exemption to 185 AND 186,also how to report in audit report.The company has neither accepted any borrowings nor any payments.pls help
27 January 2026
To avoid legal headaches and heavy penalties (which start at ₹5 Lakh for the company and imprisonment/fines for the director):
Repay the amount: Have the director deposit the ₹9.65 Lakh back into the bank account immediately (before March 31st).
Re-characterize: If the director spent it on company-related startup costs, record those expenses and treat the rest as "Cash in Hand" (if physically available) or "Advances for Expenses" (if supported by future bills).
Treat as Salary: If the director works for the company, part of it could be processed as "Director's Remuneration" (subject to TDS and slab rates).
Repay the amount: Have the director deposit the ₹9.65 Lakh back into the bank account immediately (before March 31st).
Re-characterize: If the director spent it on company-related startup costs, record those expenses and treat the rest as "Cash in Hand" (if physically available) or "Advances for Expenses" (if supported by future bills).
Treat as Salary: If the director works for the company, part of it could be processed as "Director's Remuneration" (subject to TDS and slab rates).
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