08 October 2013
Mr.A lends Rs.70,00,000/- to a partnership firm wherein his sister in law is a partner.the firm neither pays interest nor credits 'interest payable a/c' in it’s books. should the firm deduct tax on the interest not actually paid. Can a firm get interest free loan and treat it so in it’s books? Since this loan is without consideration is there any provision in the act that taxes such transactions like gift tax wealth tax etc.,? Kindly experts clarify.
08 October 2013
There is no problem any concern getting interest free loan, also no provision for treating it as gift tax, wealth tax or accruing notional interest and deducting TDS. Just make a MOU for your record that this is a interest free loan, repayable on demand..
CAclubindia
