Tax implications on unsecured interest free loan

Tax queries 1444 views 4 replies

nitin

professional

83 Points Joined February 2014

What are the tax implications for a person

Q1. who takes unsecured interest free loan from father in law for purchasing house for residential purpose.

Q2. what if the return payment installment starts after 3 years from date of taking the loan?

Q3. What will be the format of loan aggrement?

Q4. What should be the value of non-judicial stamp paper for the aggrement if loan amount is 5/10 lacs?

Replies (4)

Tribhuvan Aditya Singh

Student as well as Self-employed

3710 Points Joined September 2007

no tax implication if such loan is taken or repaid by cheque or through fund transfer..... it is not mandatory to execute an agreememt. if you want to execute then you can do it on a non-judicial stamp paper of 1000 and above.

Mihir

Wealth Manager

5293 Points Joined December 2008

You will have to contact a lawyer and ask him to draft a loan agreement between you and your father-in-law stating all the terms and conditions. This agreement will be a documentary evidence when your account gets credited with the loan amount, and when your father-in-laws account gets credited with the repayment amount.