Limit on interest rate on unsecured loan

This query is : Resolved

DIPENDU PRADHAN (Querist)
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10 October 2009 Dear sirs,

thanks for your answers.

please tell me what can be the probable consequencese in case the interest rates paid on unsecured loans taken by a partnership firm is more than 30% per annum and the firm has duly deducted TDS and submitted to the govt?

CA. B.SRINIVASULU

CA. B.SRINIVASULU (Expert)
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10 October 2009 Maximum 30% per annum will be allowed by assessing officers. its a generality and not a law.

Ratan Sharma

Ratan Sharma (Expert)
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10 October 2009 There is no limit as such. It depends between the agreement of parties. Generally it should be around 18% but not be more than 24%.

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CA Devanshi Gandhi (Ajani)

CA Devanshi Gandhi (Ajani) (Expert)
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10 October 2009 agree

DIPENDU PRADHAN

DIPENDU PRADHAN (Querist)
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MAHENDRA KUMAR BAGRECHA

MAHENDRA KUMAR BAGRECHA (Expert)
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11 October 2009 If your case selects for IT Scrutiny and Assessing officer does not allow 30% rate of interest payment, he may add back the interese expenses and may raise demand for tax payment. Before that, he may ask for parties confirmation for having received this interest payment. One thing always you should remember,Even if there is no prohibition/norms/restrictions for rate of interest, it should not be more than market rate and if it is, you should be able to justify the same.Thanks

CA Mehta Ankur N.

CA Mehta Ankur N. (Expert)
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19 October 2013 can any one suggest a case law for this ?

We are giving 18% But AO is saying it can not be more than 12%.

Any case regarding same , then please provide.

Thanks & Regards
CA Ankur Mehta
(Jai Jinendra)