I have a old friend in Europe who is willing to give me loan for 5 years for personal purpose. Is it allowed? What will be tax implications?
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Can I take Loan From Foreign Friend?
Replies (8)
Quick Summary
Yes, you are allowed to take loan in accordance with FEMA ACT.
Yes you are eligible as per procedure followed by FEMA act
Yes you are eligible for the loan
Yes subject to RBI rules
Pl explain the rules to be followed.
FEMA (Borrowing and Lending) Regulations, 2018 and RBI Master Direction - Borrowing and Lending transactions in Indian Rupee (INR) between Persons Resident in India and Non-Resident Indians / Persons of Indian Origin should help
2.1.1 Borrowing in INR by persons other than companies in India: A person resident in India, not being a company incorporated in India, may borrow in INR from NRIs/PIOs after satisfying the following terms and conditions:
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Borrowing shall be only on a non-repatriation basis;
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The amount of loan should be received either by inward remittance from outside India or by debit to NRE/NRO/FCNR(B)/NRNR/NRSR account of the lender, maintained with an authorised dealer or an authorised bank in India;
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Period of loan shall not exceed 3 years;
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Rate of interest on the loan shall not be more than two per cent above Bank Rate prevailing on the date of availment of loan;
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Payment of interest and repayment of principal shall be made only to the NRO account of the lender.
2.1.1 Borrowing in INR by persons other than companies in India: A person resident in India, not being a company incorporated in India, may borrow in INR from NRIs/PIOs after satisfying the following terms and conditions:
-
Borrowing shall be only on a non-repatriation basis;
-
The amount of loan should be received either by inward remittance from outside India or by debit to NRE/NRO/FCNR(B)/NRNR/NRSR account of the lender, maintained with an authorised dealer or an authorised bank in India;
-
Period of loan shall not exceed 3 years;
-
Rate of interest on the loan shall not be more than two per cent above Bank Rate prevailing on the date of availment of loan;
-
Payment of interest and repayment of principal shall be made only to the NRO account of the lender.
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