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Loan to director

PRABIR PAUL (*****Accountant***** Never insult to any person for any kind of lack of knowledge or misread.) (1448 Points)

04 May 2017

1) Can a Pvt. Ltd. Company give loan to Director?

2) Can a Pvt. Ltd. Company give loan to Partnership Firm?

Please explain easily...

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3 Replies

rama krishnan (12244 Points)
Replied 04 May 2017

yes, but it will be taxed in the hands of director as deemed dividend
in the case of firm, once again none of the directors should be partner of the firm. if so then it will be taxed in the hands of the director as deemed dividend

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PRABIR PAUL (*****Accountant***** Never insult to any person for any kind of lack of knowledge or misread.) (1448 Points)
Replied 05 May 2017

That means you want to say:-

1) If Pvt. Ltd. Company give loan to director then it will be treated as deemed dividend. In this case director will be liable to pay income tax on it?

2) If Pvt. Ltd. Company give loan to Partnership firm then it will be taxed in the hand of the Partner?