Does interst on loan for business get tax deduction even when the loan is from a friend in the form of a promissory note/loan agreement? Is loan for business purpose still considered 'business loan' if the lender is an individual?
Abdul Rahman Khan (1 Points)
10 July 2021Does interst on loan for business get tax deduction even when the loan is from a friend in the form of a promissory note/loan agreement? Is loan for business purpose still considered 'business loan' if the lender is an individual?
Deepa B
(Practicing Chartered Accountant )
(573 Points)
Replied 10 July 2021
Yes. Interest on business loan from a friend would be deductible. But if your nature of entity is a firm then interest rate applicable cannot exceed certain specified limit.
Balamurali Unnithan MS
(STUDENT)
(1631 Points)
Replied 10 July 2021
Deepa B
(Practicing Chartered Accountant )
(573 Points)
Replied 10 July 2021
I would like to clarify that with the usage of word "deductible" in my reply, I meant an allowable expense not Chapter VIA deduction.
Balamurali Unnithan MS
(STUDENT)
(1631 Points)
Replied 11 July 2021
You are right, Deepa Ji, Allowable as an expense, taken for business.
GST Live Certification Course (39th Batch) - April 2024 (Weekend Batch) (With Certificate)
"Live class on Python for Financial Analysis: Unlocking Efficiency in Accounting and Finance"
CAclubindia
