One of my close relative would like to invest his excess money in my business on terms of 24% interest. It is legally correct to obtain this loan and pay interest every month to him ?
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Interest on unsecured loan from relative
Replies (5)
It is 100% legal to take loan from relatives. But interest rate 24% is too high. It might be possible that in Income tax the excessive interest part is going to be disallowed.
E-mail: ca.jainam @ gmail.com
it is possible that the AO may view 24% as excessive and therefore make disallowance under Section 40A(2)(a).
Dear Manish>>>>>>>>>> Availing loan is good for business. But 24% interest is make IT dept to put their eyes on you. The interest rate should not be more than bank interest rate. If your company is pvt ltd, resolution is to be passed. You can make interest to your relative every month after deducting TDS for the same. That amount is to be remitted in the bank. ok>>>>>>>>>>>>>>>>>>>sekar
TDS @ 10% of Interest paid or entry made in the books of account. W.e. is earlier..
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