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Cash Loan to Emoloyee

CA Garima (Assistant Manager) (118 Points)

09 May 2020

To what amount can the employer give loan to his employee in cash.

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6 Replies

P-SAC (Partner) (152 Points)
Replied 09 May 2020

As per industry norms, it is generally one month salary.

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CA Garima (Assistant Manager) (118 Points)
Replied 09 May 2020

What about if we want to give more than one month salary.Is it disallowed under income tax or we can give upto Rs.2,00,000.

sabyasachi mukherjee (27579 Points)
Replied 11 May 2020

How does income tax act comes into the picture.?
Rs.2 lacs is disallowed under Income tax act...

CA Garima (Assistant Manager) (118 Points)
Replied 11 May 2020

under which section.

Vignesh Loganadan (30 Points)
Replied 14 May 2020

Loan to employees is not an expenditure.so it can't be claimed as expenses and no disallowance it comes to picture because you are not able to claim it.loan may gave at any amount to employees but loan by hard cash is possible only upto 20000.more than that it will breach of section 269ss and 100% penalty applicable for that loan.

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PARUL YADAV (finance expet) (93 Points)
Replied 24 June 2024

When offering a cash loan to an employee, it's important to consider both company policy and financial regulations. You might want to explore options through Kotak Mahindra Bank, which provides various employee loan solutions. Kotak's tailored loan products can simplify the process, ensuring compliance and offering competitive interest rates. Additionally, utilizing a reputable bank like Kotak Mahindra can provide peace of mind for both the employer and employee, as the terms and repayment conditions are transparent and well-managed. Be sure to consult with your HR department and financial advisor to structure the loan appropriately.