Akshat (Associate) 19 April 2013
Hello,
I have a question regarding providing a loan to a friend for his education. I wanted to know the following:
1. What all legal documents are required for the same?
2. I am looking to charge a interest rate which I would get from a bank FD, am I allowed to do this?
3. What are taxation implications if any for me or my friend during the course of the loan and during the repayment cycle.
Thank you very much in advance.
ajay sethi (lawyer) 19 April 2013
1)make payment only by cheque
2) ask your friend to execute a bill of exchange wherein he agrees to repay you on certian date .
3) obtain acknow ledgement in writing from your friend that he has received X amount as loan . he will repay same on y date with interest at ___ %
4) it is better your friend obtains loan from banks. if your friend is unable to repay loan then it will ruin your friend ship
manish (n/a) 19 April 2013
1. Payment Through cheque only. and get the receipt of the the cheque.
2. Draft an Loan Agreement by shoing the amount of loan, interest on it, cheque numbe and date when he received the loan, purpose for loan and his williness to repay, singed by your friend.
3. Draft a Bill of exchange or a Post dated cheque just for safety.
Thanks
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