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Tax implications on unsecured interest free loan

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nitin

professional

61 Points Posted on 26 June 2014

What are the tax implications for a person

Q1. who takes unsecured interest free loan from father in law for purchasing house for residential purpose.

Q2. what if the return payment installment starts after 3 years from date of taking the loan?

Q3. What will be the format of loan aggrement?

Q4. What should be the value of non-judicial stamp paper for the aggrement if loan amount is 5/10 lacs?

Replies (4)

Tribhuvan Aditya Singh

Student as well as Self-employed

3853 Points Posted on 26 June 2014

no tax implication if such loan is taken or repaid by cheque or through fund transfer..... it is not mandatory to execute an agreememt. if you want to execute then you can do it on a non-judicial stamp paper of 1000 and above.

Mihir

Wealth Manager

5358 Points Posted on 27 June 2014

You will have to contact a lawyer and ask him to draft a loan agreement between you and your father-in-law stating all the terms and conditions. This agreement will be a documentary evidence when your account gets credited with the loan amount, and when your father-in-laws account gets credited with the repayment amount.

nitin

professional

61 Points Posted on 30 June 2014

Doesnot a simple loan aggrement will do in this case? Does stamp paper of 100 will not suffice?

Tribhuvan Aditya Singh

Student as well as Self-employed

3853 Points Posted on 30 June 2014

@ nitin.... it has to be a loan agreement, simple or complex is not the concern. regarding stamp paper, it would be better that you ask your stamp paper vendor what amt of stamp paper is reqd in your state for a loan agreement.