In case of properitorship, if the propreitor take loan from his relative. then what is the maximum interest he can pay on these loans
14 Replies
Sunshine
(Helping All)
(10575 Points)
Replied 26 June 2011
I think the interest has to be at fair interest rates prevailing in the market or else the A.O has the right to disqualify the interest expense u/s 40 A (2)...
Regards!!
suneet
(CA FINAL)
(421 Points)
Replied 26 June 2011
there is no limit on payment of interest only if proprietor is under Tax Audit than as per section 269 you can not give interest more than 20000 in cash or bearer cheque
but by way of an by an account payee cheque or account payee bank draft .
ther is no limit on payment of interset through these modes
but of Course Section 40 A(3) comes into play
CS,CA F,Numrologi TusharSampat
(CS CA F Numerologist Astrologer Graphologist Face reader Vastu Expert)
(85930 Points)
Replied 26 June 2011
wat is d logic behind 15 % mr future ca?
can u justify ur ans?
Vijay
(Adamo Studio)
(2112 Points)
Replied 26 June 2011
Never heard about such but ya the rate should be such prevailing in the market for the same type of loan otherwise when the income comes under assessment the powers are given for dis qualification u/s 40A(2)b...
Devendra
(Chartered Accountant)
(4775 Points)
Replied 26 June 2011
As per my knowledge, the rate should be such which is similar to the market rate. If it is more than such rate, then it shall be disallowed u/s 40A(2)b.
Regards,
Devendra K
Anvesh Desai
(Chartered Accountant)
(156 Points)
Replied 26 June 2011
Dear Dheeraj..
There is nothing specefically mentioned regarding the max limit of payment of interest (w.r.t mentioned case) in any law tht exists in India...hence there is no fixed limit specified in any law that ever exsists...
One should follow the requirements mentioned by other viwers...
Sunshine
(Helping All)
(10575 Points)
Replied 26 June 2011
@ Future CA
U owe us an explaination over this "15%"...So please do the honours...
CA ADITYA SHARMA
(CA IN PRACTICE )
(16719 Points)
Replied 27 June 2011
| Originally posted by : Sunshine... | ||
 |
I think the interest has to be at fair interest rates prevailing in the market or else the A.O has the right to disqualify the interest expense u/s 40 A (2)... Regards!! |
 |
normally bank charges interest arround 15%
hence we can also give interest @ 15%
i have also seen many cases in my practical experience that AO is allowing interest @ 15%
CA SUMIT LAL
(PROPRIETOR)
(83 Points)
Replied 27 June 2011
Interest can be paid as per the prevailing ,market rates and that too can be taken as per the rates of SBI (to be on a safer side) as that is a prime lending govt. bank.
Interest paid without any logical reasoning will automatically attract the disqualification provisions.
Ravi shankar kumar
(Auditor)
(23 Points)
Replied 27 June 2011
hi ,
Pls confirm loan taken from relative which under section will be come.
n.jagi
(B.Com C.W.A(Final) C.A.I.p.cc)
(47 Points)
Replied 27 June 2011
I Agree With Mr. CA sumit lal. Since, the finance act refers to the SBI for various interest related issues.
harish agarwal
(prop.)
(22 Points)
Replied 11 July 2011
sir please send me uttarakhand vat list 0% & 4.5%
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