TRUST MEMBER CAN RECEIVE LOAN FROM TRUST

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This discussion explores the possibility of a trust providing loans to its members, particularly when the main trustee is also the primary funder. While generally, trust members cannot receive loans directly, the possibility of providing loans to employees or advances for expenses is mentioned. The conversation also touches upon using loans to generate income for the trust through interest, and the need for clear guidance and potential circulars regarding these practices.

raghavendra b

raghavendra b (Querist)

28 July 2021 DEAR SIR,

ONE OF MY CLIENT STARTED TEMPLE TRUST. HE IS THE MAIN SOURCE OF THE FUND TRUST ACTIVITIES. MEANS HE IS MAIN TRUSTEE. OTHER TRUSTEES ARE HIS RELATIVES OR FRIENDS. HE WANTS TO GIVE LOANS TO HIS TRUST MEMBERS THROUGH TRUST FUND. CAN IT BE POSSIBLE TO GIVE LOANS TO ITS MEMBERS. HE COLLECTS SIMPLE INTEREST FOR THE LOAN GIVEN. THE INTEREST WILL BE TRUST INCOME. SO I NEED YOUR GUIDENCE.

REGARDS

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

28 July 2021 Trust members can't receive loan from the trust.

raghavendra b

raghavendra b (Querist)

29 July 2021 THANK YOU SIR,

BUT CAN TRUST GIVE LOANS TO OTHERS MEANS FOR THE PURPOSE OF INCOME FOR THE TRUST.

REGARDS

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

29 July 2021 Yes, loan may be given to employees and advance paid for expenses.

raghavendra b

raghavendra b (Querist)

29 July 2021 thanks for your kind replies sir,

is there any circular can be available for that

regards

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

29 July 2021 It's my personal experience when I was a CFO of a charitable trust.

raghavendra b

raghavendra b (Querist)

29 July 2021 thank you sir,

one of my relative going to started the trust. I have told him to as per the rules no trustee can avail loan from trust it is against rules. but he is misguided by the some one he does not have any idea of trust. he thought that I am misguiding him his friend is correct. so for the references I have asked the circulars.

thank you sir,

regards

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