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Can a personal loan be taken from friends or relatives above Rs 1 lakh on interest?

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B S

Senior Manager

50 Points Posted on 09 September 2021

1. Can a person take a personal loan from friends or relatives above Rs 1 lakh at an interest of 24% per annum by cheque or bank transfer, not in cash and accounted for in IT returns?

2. If yes, it can be taken, then will the above interest of 24% PA which would be paid later, can this be treated as expenses and deducted from our income, while filing IT returns?

3. Will the TDS liability fall on the lender or borrower and what would be the % to be deducted/payable for a loan of Rs 1 lakh @ 24%PA ?

4. What would be the maximum period for which this loan can be repaid?

Thanks in anticipation to all.

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Quick Summary

This discussion explores the possibility of taking personal loans exceeding Rs 1 lakh from friends or relatives, with interest paid via cheque or bank transfer and documented for IT returns. It questions whether the 24% annual interest can be treated as a deductible expense and clarifies TDS liability for both lender and borrower. The maximum repayment period is also a key consideration.