Loan taken.

Not taxable because it will be returned back to the lender with interest. Prepare a document to record this transaction to be on a safer side.

you can face penalty by accepting cash loan refer section 269ss of income tax. The penalty is equal to loan amount accepted.

Dear All,

Thankyou for your reply.

Some replied that cash can be accepted but some replied that cash cannot be accepted. I have bben through section 269ss and it states that cash canot be accepted.

But now I have accepted, so please let me know what to do.

Thanks,

Akansha.

Dear All,

Thank you for your reply.

As per section 269ss, while taking loan from friend / relative, we cannot accept cash. It has to be through either by account payee cheque or account payee bank draft.

My query is:

a. That can we accept loan through internet bank transfer.

b. How to do documentation of loan taken from friend / relative.

Thanks,

Miss Akansha.

Hi Akansha,

There is no clarity about internet transfer of loan amount so its better to take a conservative view. About documentation, a simple letter mentioning the date,amount, terms of repayment would be enough.

In my view you should offer the loan to tax as income from other sources at normal rates (eg gift from friend>50000). This is because if it is shown as cash loan, the penalty is 100% and if it is classified u/s 68, the tax is flat 30%