Can a private firm raise loans from individual sources?

B S BHMRA (Managing Partner) (102 Points)

02 January 2012  

Dear Members,

Hello!

1. Can a private proprietorship or partnership firm raise loans for his business, from private individuals, and what is the maximum interest under law, which he can pay to the individuals, from whom loans are taken?  Can he pay high interest @ 5% per month, if he can afford the same, does law permit it?  What is TDS to be deducted from such interest payment?

2. Is any sort of an official document required to be maintained, for Income Tax purpose for such loans?

3. Is there any restriction on the maximum amount , and the number of individuals from whom loans can be accepted through such sources?

Thanking you ,

B S