What rate should be taken for charging interest under section 186 for loans and advances? The act says like the one closest to goverment security yield. What rate can be taken as the base for ascertaining government security yield?
1 Replies
Arjun Gupta
(Chartered Accountant)
(177 Points)
Replied 15 August 2017
As per Section 186(7) "No loan shall be given under this section at a rate of interest lower than the prevailing yield of one year, three year, five year or ten year Government Security closest to the tenor of the loan". At present, Return on Govt Security for period of more than one year ranges from 6% to 7%. For ascertaining more precise rate, you can visit www.rbi.org
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