Can I give a loan of Rs. 1 lakh to a friend without charging any interest from him? This will be for a period of about one year, so it will extend beyond March closing. Is such interest free loan permissible under the law?
You can give such loan to your friend without interest as a friendly loan. Since the amount of loan is more than Rs. 20,000/-, as per the provisions of the Income Tax Act, you should give this loan by way of account payee cheque and likewise the repayment of this loan should also be received by account payee cheque.
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