To write of Loan

This query is : Resolved

Life is a Race.....CA FINAL (Querist)
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29 December 2009 Hi..
Can any one guide me on following:

In a Private limited commpany has taken a loan from the director around Rs. 250000. Now the director is going to resign and he wants to forgo his loan.

What shall be done in this case?

what entry to be passed in the books of accounts of the company as well as in the books of Director(Individual)?

What are the tax consequences?

Rasesh

Rasesh (Expert)
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29 December 2009 A Company can receive the amount either as loan or as capital. In case the loan is to be forgiven, then convert it into capital or say preference shares with low rate of dividend.

Voluntary donation from director to a company is unheard of. However, the same could be done is permitted by its Memorandum and ARticles of Association

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