Tax on money taken from friends
Aniket Ingle
(Querist) 27 May 2013
This query is : Resolved
Dear Sir,
I plan to ask my family and friends for money to help me start my business. The amount that I plan to accumulate is 10 Lacs. Would I need to pay Tax for this. If yes, what is the percentage of tax that i need to pay.
This money taken from friends and family would be interest free and non returnable incase I fail in my business. Do I need to get a gift deed stating the interest free and non returnable conditions from everyone.
Regards,
Aniket Ingle
ajay sethi
(Expert) 27 May 2013
loan taken from friends and relatives have to be reflected in your income tax returns . if saidloan is not to be returned then it becomes a gift . not necessary to have a gift deed executed . letter from friends /relatives would suffice . the income that you earn from said giftt would be taxable
R.K Nanda
(Expert) 27 May 2013
no more to add.
Vineet
(Expert) 27 May 2013
Any gift received from friends and relatives other than specified relatives is taxable income in your hands if the total gift amount exceeds Rs 50000. The amount is added to your normal income and taxed as per applicable slab.
I suggest, you take this money as interest free refundable loan by account payee cheque alongwith loan letters having full details and PAN of lenders. later on if god forbid, business fails, you can ask them to waive it and pay tax at that time.
Raj Kumar Makkad
(Expert) 27 May 2013
The given situation is not constitute a loan rather the same is a gift. You are liable for normal tax as advised by vineet.
