Can a charitable trust registered u/s 12A give interest free loan to its trustee, if not interest free then at what interest rates and what are the formalities for giving this loan and can it be given from corpus fund or general fund
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Charitable trust loans to trustee
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Summary: Providing a loan from a charitable trust to its trustee is generally prohibited as it violates the condition that trust funds must be used exclusively for charitable purposes. Doing so, particularly if interest-free, risks the loss of the trust's tax-exempt status under Section 13 of the Income Tax Act and may constitute a breach of the trustee's fiduciary duty. Always consult a legal professional before considering such transactions.
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