banner_ad

Loan of a company against HUF Deposits

Pvt ltd 997 views 1 replies

There is an Indian Private Limited Company. The company has several HUFs as shareholders. The kartas of the shareholders are also directors in the company. The company wants to take loan against fixed deposits which are in the name of HUFs. Is it legal?

Replies (1)

Loan Against Fixed Deposits Held by HUFs The company wants to take a loan against fixed deposits (FDs) held in the name of HUFs, where the Kartas of these HUFs are also directors in the company. Let's examine the feasibility of this arrangement. Key Considerations -

*HUF Ownership*: The fixed deposits are held in the name of HUFs, which are separate legal entities. The HUFs, not the company or its directors, own these FDs. - 

*Karta's Role*: As Kartas, the directors have the authority to manage the HUF's assets, including the FDs. However, they must act in the best interests of the HUF. Loan Against FDs -

 *Pledge or Lien*: The HUFs can pledge or create a lien on the FDs in favor of the company as security for the loan. This would require a formal agreement between the HUFs and the company. -

*Consent of HUF Members: It's essential to obtain the consent of all HUF members (coparceners) for pledging the FDs or creating a lien, to avoid potential disputes. Legal and Tax Implications -

Compliance with Laws*: The loan arrangement must comply with relevant laws, including the Companies Act, 2013, and the Income-tax Act, 1961.

- *Tax Implications*: The interest earned on the FDs will be taxable in the hands of the HUFs. 

The loan arrangement may have tax implications for the company and the HUFs, which should be carefully evaluated.

 Conclusion Taking a loan against fixed deposits held by HUFs is possible, but it requires careful consideration of the legal and tax implications.

The company should ensure that the arrangement is properly documented, and all necessary consents are obtained from the HUF members.


CCI Pro

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
10 May 2026
Finance specialist

Right way solution

Ajmer

CA

View Details
Company
11 May 2026
Post office

Post office

Anakapalle

Others

View Details
Company
26 May 2026
Education Content Creator

Adyayam Education LLP

Bengaluru

CA Foundation

View Details
Company
Featured 27 May 2026
Lead Conversion Executive / Sales Closing Executive

SMJ global advisors pvt ltd

New Delhi

B.Com

View Details
Company
08 May 2026
Paid Assistants

Quick Taxperts Private Limited

Bengaluru

Graduate (Any)

View Details
Company
07 May 2026
CA Assistant

amit desai and co

Mumbai

CA Final

View Details
Company
22 May 2026
U.S. Financial Reporting & Consolidation Manager

Karia Overseas

Ahmedabad

CA

View Details
Company
11 May 2026
CA Dropout

Patron Accounting LLP

Pune

CA Inter

View Details