Presentation of interest of unsecured loan in itr

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Shyam Tripathy (Querist)
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29 March 2016 Can an assessee lend his CASH of Rupees 2 Lacs in different intervals to another assesse as an UNSECURED LOAN with an Interst Rate of 12 Percent Per Annum?

If So, What are the INCOME TAX Provisions regarding The payment of Rs 2 Lacs by a Resident Individual to another Resident Indivdual, and the Taxability Point for both the assessee if the payee assessee utilises the amount received in his Proprietory Business?

How can this 2 lacs amount and the interest thereon the sum, be shown in Income Tax Return by The Payee and the Payer of the Sum..?

Please Make the Reply at the Earliest. Its URGENT.

Gaurav Verma

Gaurav Verma (Expert)
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29 March 2016 Dear Shyam,

Answers
1. Yes, Assessee can give unsecured loan by cheque only.
2. No Tax liablity.
3. 1st point how to show rs. 2 lacs in Income tax return.

if you file form 4s, no need to show the amount.
if you file form 4 or 5 or 6, you have to show the same in balance sheet.

2nd point. Interest payer can claim the interest expenses in profit & loss account.
Interest received is income of Mr.Receiver.

Shyam Tripathy

Shyam Tripathy (Querist)
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29 March 2016 SIR,

IF THE LOAN HAS BEEN GIVEN IN CASH IN SMALL DENOMINATIONS AT DIFFERENT INTERVALS TO RECEIVER, THEN IN ITR 4 BALANCE SHEET, THE LENDER WILL SHOW THE AMOUNT OF 2 LACS UNDER LOANS AND ADVANCE TO OTHERS?

IF SO, WHAT WILL BE THE CORRESPONDING ENTRY FOR THE SAME WHERE THE LENDER HAS NO BOOKS OF ACCOUNTS?? CAN THE AMOUNT BE SHOWN IN "DEBTORS" IF NO BOOKS OF ACCOUNTS IS MAINTAINED?

WILL THE CASH PAYMENT OF RS 2 LACS IN DENOMINATIONS LESS THAN 20000 RUPEES BE DISALLOWED AS LENDING OF THE AMOUNT TO OTHER ASSESSEE..?

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Gaurav Verma

Gaurav Verma (Expert)
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29 March 2016 It cant be exceed rs. 20,000 in year. read section. 269ss

269SS. No person shall take or accept from any other person (herein referred to as the depositor), any loan or deposit or any specified sum, otherwise than by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account, if,—
(a) the amount of such loan or deposit or specified sum or the aggregate amount of such loan, deposit and specified sum; or
(b) on the date of taking or accepting such loan or deposit or specified sum, any loan or deposit or specified sum taken or accepted earlier by such person from the depositor is remaining unpaid (whether repayment has fallen due or not), the amount or the aggregate amount remaining unpaid; or
(c) the amount or the aggregate amount referred to in clause (a) together with the amount or the aggregate amount referred to in clause (b),
is twenty thousand rupees or more:
Provided that the provisions of this section shall not apply to any loan or deposit or specified sum taken or accepted from, or any loan or deposit or specified sum taken or accepted by,—
(a) the Government;
(b) any banking company, post office savings bank or co-operative bank;
(c) any corporation established by a Central, State or Provincial Act;
(d) any Government company as defined in clause (45) of section 2 of the Companies Act, 2013 (18 of 2013);
(e) such other institution, association or body or class of institutions, associations or bodies which the Central Government may, for reasons to be recorded in writing, notify in this behalf in the Official Gazette:
Provided further that the provisions of this section shall not apply to any loan or deposit or specified sum, where the person from whom the loan or deposit or specified sum is taken or accepted and the person by whom the loan or deposit or specified sum is taken or accepted, are both having agricultural income and neither of them has any income chargeable to tax under this Act.
Explanation.—For the purposes of this section,—
(i) "banking company" means a company to which the provisions of the Banking Regulation Act, 1949 (10 of 1949) applies and includes any bank or banking institution referred to in section 51 of that Act;
(ii) "co-operative bank" shall have the same meaning as assigned to it in Part V of the Banking Regulation Act, 1949 (10 of 1949) ;
(iii) "loan or deposit" means loan or deposit of money;
(iv) "specified sum" means any sum of money receivable, whether as advance or otherwise, in relation to transfer of an immovable property, whether or not the transfer takes place.]

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