Closure of loans of directors in pvt ltd company

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

18 February 2014 Dear Sir,
If Director of Private limited company having loan(advances) of 2.76 Crore. But Now he was getting Bonus from US Company(51% of Foreign) Up to 3 Crores( in march 1 crore & 2 crore in may 2014). he was problem of more likability.
he was planning close the Loans upto 50% in 31.3.2014. remaining amount in may 2014 . is possible or full amount will close?
is any problem will arise from income tax. ?

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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18 February 2014 If the director has personally taken the loan from the company then the Auditors report has to be qualified and if the loan has been given from the borrowed funds to the director then the company shall not get the interest as deduction under income tax. From your question nothing is clear whether the comapny has advanced loan or he the director has taken loan from any bank or other person.

If director is getting money then he should immediately clear the loan of the company and you have to examine the nature of funds the director is receiving to clear the loan . If it is taxable then tax has to be paid .

Querist : Anonymous

Querist : Anonymous (Querist)

18 February 2014 Dear Sir,
Director took loan from Comapnay, that balance from last 1.5 years . still pending. hence he was right now his position of finance very bad because another companyies loss. hence , he will plann for 50% close in before march another remaining 50% of balance clear in before sept 2014. is it possible? or fully clear?
please give some advice sir?

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Querist : Anonymous

Querist : Anonymous (Querist)

Asha Kanta Sharma online

Asha Kanta Sharma

(Expert)
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19 July 2024 It seems like you have a complex financial situation involving a director of a private limited company with substantial loans and anticipated bonuses from a foreign company. Here are some considerations and advice based on the information provided:

1. **Loan Repayment Plan:**
- The director plans to repay 50% of the loan (approximately 1.38 Crore) by March 31, 2014, and the remaining 50% (approximately 1.38 Crore) by September 2014.
- Whether this plan is feasible depends on various factors such as the director's ability to generate income from bonuses as planned and other financial obligations.

2. **Tax Implications:**
- Loans taken by directors from their own companies or related entities need to comply with certain provisions under the Income Tax Act to avoid tax implications.
- If the loans are not interest-free or if interest is charged at a rate lower than the prescribed rate by the Income Tax Act, there may be tax implications for the director in terms of deemed income.

3. **Practical Considerations:**
- It's important to ensure that any loan repayments or financial transactions are documented properly and comply with legal and regulatory requirements.
- The director should consider seeking advice from a tax consultant or financial advisor to assess the tax implications and to structure the loan repayments in a tax-efficient manner.

4. **Financial Stability:**
- Given the director's current financial position and the planned repayments, it's crucial to ensure that sufficient funds are available for personal and business expenses.
- Prudent financial planning and budgeting are essential to manage repayments effectively without jeopardizing personal financial stability.

5. **Legal and Compliance Aspects:**
- Ensure compliance with all legal and regulatory requirements related to loans, tax filings, and disclosures, especially when dealing with substantial amounts and cross-border transactions.

In summary, while the director's plan to repay 50% of the loan by March 31, 2014, and the remaining 50% by September 2014 may be feasible, it's important to carefully consider tax implications and ensure compliance with legal requirements. Seeking professional advice from a tax consultant or financial advisor would be highly recommended to navigate through these financial decisions effectively.