22 December 2012
I am a business man residing in india and I am getting loan from NRO friend to repay my debts. I want to know if there is any thing against law as per Income tax.
22 December 2012
There is nothing wrong in taking a loan from your friend.
Assuming that the loan is taken for the purpose of repaying the debts of your business in India, in such case any interest paid to your NRI friend for the loan amount received is considered as “income deemed to accrue or arise in India” and taxable in India in the hands of your friend.
The above is as per section 9 (1)(v) of the income tax act.
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