Loan v/s corpus donation

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

19 March 2014 If an individual has given loan to trust and the trust is now unable to repay it, Individual has agreed to convert the loan to donation. is this can be made and what is the procedure?? Please answer this as early as possible.

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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19 March 2014 1. Yes it is permissible.

2. The trust has to obtain a letter from the individual expressing his consent to treat the loan as a donation.

3. The trust has to pass the entry:

Unsecured Loan A/c Dr
To Donation A/c

4. The trust should give a donation receipt to the individual.

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