Individual lending loan to a proprietorship firm

Agreement deeds 3439 views 3 replies

SANTHAMURTHY

self employed

24 Points Joined March 2014

Dear Sir/ Madam,

I am an individual and am planning to provide say 5 lakhs at an interest rate of 24% per annum for 2 years to a proprietorship firm / proprietor, without any kind of mortgage. I would be receiving interest on a month on month basis, until my principal is returned.

a) What is the procedure to be followed in terms of agreement / promissory note to safeguard my money.

b) What action can I be able to take against the proprietorship firm / proprietor, if the interest or principal is not paid to me.

c) Would I need to pay tax for the interest received. If so, where can I get the details of how much tax need to be paid.

Replies (3)

Unnikrishnan B

Forex In Charge

740 Points Joined January 2014

Sir,

As a banker i can tell u that there is difference between Individual and proprietory firm so what we do is take Demand Promossory Note as basic document and please remember try to get an acknoledgement of debt from the borrower within every three years as 3 years is the limitation period for the borrowing.some private financial institutions also obtains Cheque leaf as additional security

the remedy available for u is through court

Next you have to pay taxes if your income exeeds the basic exemption limit and interest income is normal income basic exemption is available for u

This is a general guideline please talk with an expert before giving loans to anybody

Thank u