Loan

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

02 February 2016 example - If individual take loan Rs.10 lac at 9% from some one and , lend to 10 lacs @ 12% to some one.

if i regularly do this for earning margin interest, if any licence require ? and income tax act relevance to this.

CA CMA CS Ram Pavan Kumar Melam

CA CMA CS Ram Pavan Kumar Melam (Expert)
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03 February 2016 Refer section 45S of the RBI Act. Only banking companies and NBFCs can do lending business or accept deposits.

Regarding Income Tax, you may offer the income under the head "other sources" as you do not have licence or approval of doing lending business and claim interest u/s 57. The question of legality of business does not arise in case of Income Tax liability. However, penalties (expenditure in relation to an offence or prohibited by law) etc. cannot be claimed as per explanation 1 to section 37, in case of PGBP.