can an individual pay interest on loan taken from a another in cash say rs.60000/-(quaterly rs.15000) ? whther he is liable to deduct tax while making the payment, if he had been liable to tax audit in immediately precedding financial year
manik (ca in practice) (420 Points)
24 February 2011can an individual pay interest on loan taken from a another in cash say rs.60000/-(quaterly rs.15000) ? whther he is liable to deduct tax while making the payment, if he had been liable to tax audit in immediately precedding financial year
Devendra
(Chartered Accountant)
(4775 Points)
Replied 24 February 2011
Dear Manik,
1) First of all, as per Section 269SS of the Income Tax Act, 1961, an assessee cannot receive a Loan in Cash above Rs. 20000.
2) You may repay the loan in cash below Rs. 20000 (ie. each installment in cash which does not exceed Rs. 20000), but you will have to deduct TDS on the payment of such Interest u/s 194A, if you are liable for an audit. (If you have to pay interest above Rs. 20000, then you will have to pay the same through A/C Payee Cheque as per Section 269T.)
Regards,
Devendra K
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