Lending money to a friend

Querist : Anonymous (Querist) 26 August 2011 This query is : Resolved
Hi,

I have given a amount of loan on certain rate of interest to a friend who needed it for some personal reasons. I had a few doubts before I get this on papers. I have already given the amount on face value as she needed it desperately but want to get this on papers now.

Kindly provide your valuable feedback as I don’t want to do something wrong here and then be in trouble.

Thank You

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ajay sethi (Expert) 26 August 2011
when was the money adavnced/ was it by cash or cheque ?
not necessary to make it on stamp paper .
obtain a letter from her that she wants a loan and that she will pay it with interest etc . also mention when she will repay the loan .

after receipt of letter you write back that you are giving loan at ____interest . loan to be rapid by _______

Querist : Anonymous (Querist) 26 August 2011
Thank you Ajay for your speedy reply.

ajay sethi (Expert) 26 August 2011
how much was the amount?
obtain letter from her on her letterhead that she wants loan

Querist : Anonymous (Querist) 26 August 2011
Isn't it fine if I take it in writing on a 100Rs stamp paper that "on request she has borrowed a sum of Rs. ____ on ___rate of interest on _____(date). She promises to make the interest payment every month and the principal amount in a years time i.e August 2011.On default of making the payment necessay legal action would be initiated.

Signed by the lender / borrower and two more witnesses.

Thank You

ajay sethi (Expert) 26 August 2011
how can you give rs 3 lakhs in cash?you will have to state money of rs 3 lakhs give on various dates over period of some months . payment of rs 3 lakhs is in violation of income tax act .

Guest (Expert) 26 August 2011
Dear Anonymous,

Since the cash transaction is in contravantion of the banking laws and much more as prescribed by the Ministry of Finance, any solution provided on this open public form may be harmful in the interest of both you and the expert suggesting such solution.

As such it is advised to consult some local taxation or other expert lawyer.

Raj Kumar Makkad (Expert) 26 August 2011
It is better if you show this amount given on loan on various dates on promissory notes. The promissory note is generally found everywhere with form vendors (especially outside of court campuses all over India). Stamp of only Rs. 2/3 is required to be affixed thereto.

Querist : Anonymous (Querist) 26 August 2011
Thank You all for your valuable advise.

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