Right procedure to loan to relative ?

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Querist : Anonymous

Querist : Anonymous (Querist)

22 January 2015 Respected experts ,

one year ago i have loaned to my maternal unlcle 2 lakhs cash without charging interest ( Rs 50-50 thousends in 4 months ) . I am a tax payer . i run a coaching . Since in my family my brother , mother and father has their own income from business and salary thats why whatever i earned i loaned to my uncle for 6 months in cash ( in cash because i dont have cheque book and sice i get money in stallements by students thats why i never have bulk amount of money in my bank account ) . one day ,One of friend told me that the way i loaned my uncle is wrong but he dint clear me why ...
My question is ..
1) since i have already given loan in cash , is this wrong ?

2) Now if my uncle wants to return money , what procedure should i approach so that to avoid wrong transaction ?

3) will i have to prepare a stamp to make that transection right ?

please show me some way

Amol S Joglekar

Amol S Joglekar (Expert)
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22 January 2015 Cash is legal tender money in our country, so nothing WRONG in doing so as per the exigencies of the time.
Under Income Tax, there are some restrictive provisions...pls go through section 269SS and 269T
Now that whatever has been done has already happened, you need not take tension of the same.
(By the way.... in today's world.. when even we r heading towards JAN DHAN scheme... you are NOT having a Bank Account is slightly CONTRADICTORY...isnt it?.. You are having internet but NOT a bank account...)

Rupesh Jain

Rupesh Jain (Expert)
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22 January 2015 udner income tax act you cannot give loan to any one from rs. 20000/- in year to any one. due to us/ 269SS and 269T applicable .

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Querist : Anonymous

Querist : Anonymous (Querist)

22 January 2015 respected expert :: i have an bank account . but i had given cash to my uncle what i have earned through my coaching institute ... i kept that amount in home and then i had given to uncle . I never thought that giving loan from home is not allowed in cash . I was thinking it is my earning i can use it anyway . I was unaware from the section 269ss , but now i dont do any cash transaction, it had happened in past . Now what can i do it for that transaction so that i will not have to face any problem ...

Amol S Joglekar

Amol S Joglekar (Expert)
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23 January 2015 Whatever has happened, leave it at its own. While repaying the said loan by your uncle, make use of sec 269T
Henceforth, as you rightly said, you will take care of those 2 sections along with any amendments that might come in due course of time.

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