Urgent...loan from japan
This query is : Resolved
02 May 2012
Dear All,
One of my friends working in Japan has received a Loan from his japanese company there & now he wants to send this money to his father in India. Now whether this money will be taxable in India or not & if yes in whose hands & how DTAA agreement between India & Japan can help on this.
My friends residential status is ordinary resident since he stayed for more than 182 days in 2011-12.
thanks
Amit
One of my friends working in Japan has received a Loan from his japanese company there & now he wants to send this money to his father in India. Now whether this money will be taxable in India or not & if yes in whose hands & how DTAA agreement between India & Japan can help on this.
My friends residential status is ordinary resident since he stayed for more than 182 days in 2011-12.
thanks
Amit
02 May 2012
I am not sure but it is not taxable.
02 May 2012
Amit if you are sure that the amount is LOAN and not in the disguise of LOAN, it is NOT taxable in INDIA under Income Tax. You need to check this under FEMA because some where else you have mentioned this amount to be 70Lakh (I hope INR and not YEN)
Message likes :
1 times
02 May 2012
Dear Sir,
The amount is Rs 70 Lac & as per my FEMA knowledge loan from relative outside india is not taxable.
Also the amount is Loan as written agreement will ne made between the employer & thew employee.
Amit
The amount is Rs 70 Lac & as per my FEMA knowledge loan from relative outside india is not taxable.
Also the amount is Loan as written agreement will ne made between the employer & thew employee.
Amit
02 August 2025
Here's a clear and urgent summary regarding the loan from Japan:
---
### Taxability of Loan Received from Japanese Company by Resident Indian
1. **Nature of Amount: Loan vs Income**
* Since this amount is a **loan** (documented with proper agreement), **it is not taxable as income in India**.
* A loan is a **liability, not income**, so it does not attract income tax.
2. **Residential Status**
* Since your friend is an **ordinary resident** (residing >182 days in India during FY 2011-12), his **global income is taxable** in India.
* However, a loan is **not income**, so no tax on receipt of loan.
3. **DTAA (Double Taxation Avoidance Agreement)**
* DTAA between India and Japan applies to **income taxes**, not to receipt of loans.
* Since no income arises here, DTAA has **no direct impact** on this loan.
4. **FEMA (Foreign Exchange Management Act) Compliance**
* Receipt of loan from a foreign entity must comply with **FEMA regulations**.
* Such loans may require reporting to RBI through **AD (Authorized Dealer) bank** or under **External Commercial Borrowing (ECB) guidelines** if applicable.
* Loans from foreign companies usually need proper documentation, and limits must be adhered to.
5. **Taxability in Father's Hands**
* If father in India **just receives the money as a gift/transfer** from the son, this may attract **gift tax provisions** under Income Tax Act (though India has no separate gift tax, gifts above Rs. 50,000 are taxable as income under “Income from Other Sources” unless from relatives).
* Since father is a relative, **gift received from son is not taxable**.
---
### Summary:
| Aspect | Position |
| ------------------------------- | ---------------------------------------- |
| Loan receipt by resident Indian | Not taxable as income |
| Loan amount transfer to father | Gift from son to father - not taxable |
| DTAA applicability | Not applicable for loan transaction |
| FEMA compliance | Must comply with RBI/AD bank regulations |
---
If your friend needs, I can help draft a **FEMA compliance checklist** or provide guidance on the documentation required for RBI/Bank filings. Would that help?
---
### Taxability of Loan Received from Japanese Company by Resident Indian
1. **Nature of Amount: Loan vs Income**
* Since this amount is a **loan** (documented with proper agreement), **it is not taxable as income in India**.
* A loan is a **liability, not income**, so it does not attract income tax.
2. **Residential Status**
* Since your friend is an **ordinary resident** (residing >182 days in India during FY 2011-12), his **global income is taxable** in India.
* However, a loan is **not income**, so no tax on receipt of loan.
3. **DTAA (Double Taxation Avoidance Agreement)**
* DTAA between India and Japan applies to **income taxes**, not to receipt of loans.
* Since no income arises here, DTAA has **no direct impact** on this loan.
4. **FEMA (Foreign Exchange Management Act) Compliance**
* Receipt of loan from a foreign entity must comply with **FEMA regulations**.
* Such loans may require reporting to RBI through **AD (Authorized Dealer) bank** or under **External Commercial Borrowing (ECB) guidelines** if applicable.
* Loans from foreign companies usually need proper documentation, and limits must be adhered to.
5. **Taxability in Father's Hands**
* If father in India **just receives the money as a gift/transfer** from the son, this may attract **gift tax provisions** under Income Tax Act (though India has no separate gift tax, gifts above Rs. 50,000 are taxable as income under “Income from Other Sources” unless from relatives).
* Since father is a relative, **gift received from son is not taxable**.
---
### Summary:
| Aspect | Position |
| ------------------------------- | ---------------------------------------- |
| Loan receipt by resident Indian | Not taxable as income |
| Loan amount transfer to father | Gift from son to father - not taxable |
| DTAA applicability | Not applicable for loan transaction |
| FEMA compliance | Must comply with RBI/AD bank regulations |
---
If your friend needs, I can help draft a **FEMA compliance checklist** or provide guidance on the documentation required for RBI/Bank filings. Would that help?
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- GSTR9- ITC
- Audit of F and O T/O
- GST 9- Table 8
- REVENUE RECOGNITION AS PER IND AS 115
- RCM on GTA Services
- How to update Transaction data in broker samco account holding after transfer shares KARVY
- Applicablity on tds
- Unable to generate and save json file for updated return
- GST payable under RCM
- WRONGLY UPLOADED 10IF FOR COOPERATIVE SOCIETY
- Related to Rate of Depreciation
- Mismatch of Sales Invoice in GSTR-1
- Query on Mismatch of Sales Invoice in GSTR-1
- Import purchase entry
- Rule 54(1A) for Distributing ITC
- EXCESS CREDIT REALTED GST REVERSAL
- Export invoice not reported
- CA Articleship Extension Matter
- GST OFFICER WRONG NOTICE
- "Please ensure that the Total of the Deductions u/s 54F match the same in Table D in Sch CG"
Trending Online Classes
-
LIVE Course on GSTR-9 & GSTR-9C (Technical | Practical | Concept - Based)
Sachin Jain03 November 2025
CAclubindia
