Loan from relative

I think the interest has to be at fair interest rates prevailing in the market or else the A.O has the right to disqualify the interest expense u/s 40 A (2)...

Regards!!

there is no limit on payment of interest only if proprietor is under Tax Audit than as per  section 269 you can not give interest more than 20000 in cash or bearer cheque

but by way of an by an account payee cheque or account payee bank draft .

ther is no limit on payment of interset through these modes

but of Course Section 40 A(3) comes into play

15%                                                                                

wat is d logic behind 15 % mr future ca?

can u justify ur ans?

Never heard about such but ya the rate should be such prevailing in the market for the same type of loan otherwise when the income comes under assessment the powers are given for dis qualification u/s 40A(2)b...

As per my knowledge, the rate should be such which is similar to the market rate. If it is more than such rate, then it shall be disallowed u/s 40A(2)b.

Regards,
Devendra K

Dear Dheeraj..

There is nothing specefically mentioned regarding the max limit of payment of interest (w.r.t mentioned case) in any law tht exists in India...hence there is no fixed limit specified in any law that ever exsists...

One should follow the requirements mentioned by other viwers...

no maximum limit prescribed

@ Future CA

U owe us an explaination over this "15%"...So please do the honours...

Originally posted by : Sunshine...
	I think the interest has to be at fair interest rates prevailing in the market or else the A.O has the right to disqualify the interest expense u/s 40 A (2)...   Regards!!

normally bank charges interest arround 15%

hence we can also give interest @ 15%

i have also seen many cases in my practical experience that AO is allowing interest @ 15%

Interest can be paid as per the prevailing ,market rates and that too can be taken as per the rates of SBI (to be on a safer side) as that is a prime lending govt. bank.

Interest paid without any logical reasoning will automatically attract the disqualification provisions.

hi ,

Pls confirm loan taken from relative which under section will be come.

I Agree With Mr. CA sumit lal. Since, the finance act refers to the SBI for various interest related issues.

sir please send me uttarakhand vat list 0% & 4.5%