Whether Society and Section 8 Company can give loan to another society and can charge interest?

This query is : Resolved

ashish goel (Querist)
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25 November 2023 Dear Sir,

One of our society and section 8 company wants to give loan to another society and on that loan, interest would also be charge by them. My query is whether section 8 and society can give loan to another society and would charge interest thereon as purpose of the society and section 8 company was formed for a charitable purpose. Whether chargeable interest would be considered as his non charitable income or business income.. Is society and section 8 company can charge interest on the loan and would earn interest as income.. Requested to present your views..

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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25 November 2023 There is no bar for one charitable trust donating or advancing loan to another charitable trust registered under Section 12A.
It's a loan advanced to another charitable trust and the interest earned on it can't be considered as business income.