Loan from director
This query is : Resolved
29 June 2011
Pls Advice :
In case of Pvt Ltd ccompany-
whather a Pvt Ltd company can take loan from director in cash?
In case of Pvt Ltd ccompany-
whather a Pvt Ltd company can take loan from director in cash?
29 June 2011
Under Companies Act, 1956
Directors and their relatives and shareholders can give loans to Pvt Company, provided there should be proper agreement or deed and such loan should not be against the shareholders interest in the company. By mere Cash I think yes, but in normal course of business the same will be routed through Bank or Authorised Dealer if FEMA is applicable to the situation.
Under Income Tax Act, 1961
According to Income Tax Act, cash loans beyond 20,000/- are not allowed. You may further refer Sections 69D, 269SS & 269T for the explanation.
Further explaination in addition to above :
Sec 69D : Amount borrowed / repaid on hundi except by a/c payee cheque
Sec 269SS : Any person ACCEPTS any loan or deposit otherwise by a/c payee cheque / demand draft of20000/- or more.
Penalty u/s 271D for default of sec 269SS : equal to loan/deposit taken/accepted.
Sec 269T : Any Company including Banking Company & its branches, Co-operative Banks & its Branches, Co-operative Society, Firm or other person REPAY any loan or deposit (together wid interest) otherwise by a/c payee cheque / demand draft of20000/- or more.
Penalty u/s 271D for default of sec 269T : equal to loan/deposit repaid.
Exceptions : The above restrictions shall not apply if loan/deposit taken/accepted from or repaid to :
Govt.
Banking Company, Post office saving bank or Co-operative Bank,
Govt Companies or Corporation u/s 617 of companies act, 1956,
Other person notified in official gazatte.
Conclusion :
1. The loan in CASH can be taken by the company from its directors, relative of directors or from shareholders, after proper documentation & under the terms & conditions which are not prejudicial to the company, If :-
loan amount below 20000/-
or
any loan amount (whether below or equal to or more than 20000/-) if the loan is taken by Govt., Banking Company, Post office saving bank or Co-operative Bank, Govt Companies or Corporation u/s 617 of companies act, 1956,Other person notified in official gazatte.
2. In any other case, the Loan must be taken in ACCOUNT PAYEE CHEQUE OR BANK DRAFT.
Directors and their relatives and shareholders can give loans to Pvt Company, provided there should be proper agreement or deed and such loan should not be against the shareholders interest in the company. By mere Cash I think yes, but in normal course of business the same will be routed through Bank or Authorised Dealer if FEMA is applicable to the situation.
Under Income Tax Act, 1961
According to Income Tax Act, cash loans beyond 20,000/- are not allowed. You may further refer Sections 69D, 269SS & 269T for the explanation.
Further explaination in addition to above :
Sec 69D : Amount borrowed / repaid on hundi except by a/c payee cheque
Sec 269SS : Any person ACCEPTS any loan or deposit otherwise by a/c payee cheque / demand draft of20000/- or more.
Penalty u/s 271D for default of sec 269SS : equal to loan/deposit taken/accepted.
Sec 269T : Any Company including Banking Company & its branches, Co-operative Banks & its Branches, Co-operative Society, Firm or other person REPAY any loan or deposit (together wid interest) otherwise by a/c payee cheque / demand draft of20000/- or more.
Penalty u/s 271D for default of sec 269T : equal to loan/deposit repaid.
Exceptions : The above restrictions shall not apply if loan/deposit taken/accepted from or repaid to :
Govt.
Banking Company, Post office saving bank or Co-operative Bank,
Govt Companies or Corporation u/s 617 of companies act, 1956,
Other person notified in official gazatte.
Conclusion :
1. The loan in CASH can be taken by the company from its directors, relative of directors or from shareholders, after proper documentation & under the terms & conditions which are not prejudicial to the company, If :-
loan amount below 20000/-
or
any loan amount (whether below or equal to or more than 20000/-) if the loan is taken by Govt., Banking Company, Post office saving bank or Co-operative Bank, Govt Companies or Corporation u/s 617 of companies act, 1956,Other person notified in official gazatte.
2. In any other case, the Loan must be taken in ACCOUNT PAYEE CHEQUE OR BANK DRAFT.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Is this income indian or foreign income?
- ITC temporary reversal and reclaim
- Inventory of finished goods
- Applicable TDS rate for sale of property in Nov 2024
- RCM INVOICING FROM NOV-2024
- GST Regis.
- Can we claim ITC of Feb-2024 in the month of November-2024 which was not claimed by oversight
- Sale of property furniture sale
- REGARDING 25 AS DATE OF PAYMENT AND DATE OF BOOKING
- Quiery in relation to GST liability in case of an advocate who has obtained GST registration.
- LAST YEAR 2022-23 ITC IN NEXT YEAR 2023-24 REPORITNG IN GSTR-9
- MIS MATCH OF INVOICE NUMBER
- IGST Credit-Show cause notice issued-confusion
- Issue of gst e invoice
- How to adjusted advances given or receipt
- Foreign vendor without PAN unable to to register due to non receipt of OTP on foreign number ?
- 133(6) DIN INVALID format error - ->WHERE TO REPLY 133(6) notice?
- Query for dubts
- Regarding einvoice taken on nil rated sales
- Strategical investment in Public listed company
Trending Online Classes
CAclubindia
