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JUST ASK ABOUT TAXATION





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COMMUNITY Forum

By : SOMEN DUTTA
On : 24 April 2009

Interest on LOan

Dear All members, My query is related to certain loans we have given from our companies, some from partnership, some from private limited companies to various individuals. All the loans are: 1- Interest free. 2. Loans are ranging from Rs.1 lakh to Rs.20 Lakhs varying from individual to individual. - 3. Most of the loans are for last one year or above period. I want your advice with respect to income tax department angle whether department can put an objection at any time of our giving such interest free loans to so many individuals without charging any interest and whether we are liable to pay any tax or penalty for such loans. You will appreciate that this is a common human psychology that if somebody has taken interest free loan, they are always reluctant to return timely as they have nothing to lose, this way we are also having liquidity / cash flow problem at our end and we have to keep reminding people time to time. As most of these people are close to us either related or working with us and we gave them loan on their hour of need just to help them and accordingly we never thought of taking any rough stand with them. Please spare little bit time on this issue as I do not want any kind of unnecessary complications at a later date as far as income tax is concerned. Kind Regards Somen Dutta , Advocate

 

By : Sivadas Chettur
On : 01 September 2009

Re:Interest on loan

It appears from the narration of facts that the loan given is interest free. The Income tax department cannot raise any objection to the loans since it is a matter of contract between private persons. The parties are free to decide anything subject to restrictions in law. There is no law in India at present which prohibits this practice. The slow repaymant is also not a problem. Of course the IT Dept can enquire about the genuinness of the loan but I hope in the facts of the case that will not pose any problem. Hence according to me there is nothing to worry. siva208@yahoo.com

 

By : Vineet
On : 23 October 2009

Re:Interest on Loan

The Income Tax Department is surely going to examine these interest free loans if the case is picked up for scrutiny. If the loans are established to be sourced from lenders own funds, there is no problem. But if the lenders have also borrowed interest bearing funds and claiming deduction for interest, the ITO has all the rights to disallow interest claim to the extent linked to interest free loans if these interest free loans have been advanced to group concerns or related individuals or not in normal course of business. 

 

By : archana
On : 16 January 2010

Re:deduction u/s 80c

i have taken home loan from LIC housing finance limited in october 09 as co-applicant.i have started repaying the loan also.house is in my dad's name.will i get deduction u/s 80c.please help me soon and if possible please tell me related case law if any.

 

By : archana
On : 21 January 2010

deduction u/s 80c

i have a problem regarding deduction u/s 80c for the repayment of principal amount of housing loan.i have taken home loan from LIC housing finance limited in october 09 as co-applicant.i have started repaying the loan also.house is in my dad's name.will i get deduction u/s 80c?please help me soon and if possible please tell me related case law if any.

 

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