Acceptancce of Loan from NRI

A person resident in India, not being a company incorporated in India, may borrow in rupees on non-repatriation basis from a non-resident Indian or a person of Indian origin resident outside India, subject to the following conditions :

 (i)  the amount of loan shall be received by way of inward remittance from outside India or out of Non-resident External (NRE)/Non-resident Ordinary (NRO)/Foreign Currency Non-resident (FCNR)/Non-resident Non-repatriable (NRNR)/Non-resident Special Rupee (NRSR) account of the lender maintained with an authorised dealer or an authorised bank in India;

(ii)  the period of loan shall not exceed three years;

(iii)  the rate of interest on the loan shall not exceed two percentage points over the Bank rate prevailing on the date of availment of loan;

(iv)  where the loan is made out of funds held in Non-resident Special Rupee (NRSR) account of the lender, payment of interest and repayment of loan shall be made by credit to that account; and in other cases, payment of interest and repayment of loan shall be made by credit to the lender’s Non-resident Ordinary (NRO) or Non-resident Special Rupees (NRSR) account as desired by the lender; and

(v)  the amount borrowed shall not be allowed to be repatri­ated outside India.

(vi) TDS @ 20%+Sc(if any)+2% cess if required to be deducted from interest for claiming the interest expense.

Sir, Thanks for your detailed response.