Mixing
INR 10 million borrowed from friend at 7% interest per annum
Clash Royale CLAN TAG#URR8PPP
.everyoneloves__top-leaderboard:empty,.everyoneloves__mid-leaderboard:empty margin-bottom:0;
up vote
7
down vote
favorite
If my friend transfers INR 10,000,000 into my bank account and we make a legal document for the same to return the amount at 7% per annum for next 12 yrs, should I pay tax on the same?
If my salary is INR 150,000 per month, and I pay INR 60,000 per month to my friend to repay the debt, will income tax be deducted as if I were earning only INR 90,000/month, or will income tax be deducted from the INR 150,000 /month salary, and I have to pay INR 60,000 each month to my friend from what is left of my salary after the income tax is deducted?
income-tax india tax-deduction debt personal-loan
edited 15 mins ago
RonJohn
11.7k41950
asked yesterday
New to finance
3912
New contributor
New to finance is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
add a comment |Â
up vote
7
down vote
favorite
If my friend transfers INR 10,000,000 into my bank account and we make a legal document for the same to return the amount at 7% per annum for next 12 yrs, should I pay tax on the same?
If my salary is INR 150,000 per month, and I pay INR 60,000 per month to my friend to repay the debt, will income tax be deducted as if I were earning only INR 90,000/month, or will income tax be deducted from the INR 150,000 /month salary, and I have to pay INR 60,000 each month to my friend from what is left of my salary after the income tax is deducted?
income-tax india tax-deduction debt personal-loan
edited 15 mins ago
RonJohn
11.7k41950
asked yesterday
New to finance
3912
New contributor
New to finance is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
2
The interest income goes to your friend, and in Australia (not sure about India), borrowed principal isn't taxed. What tax are you asking about when you say "tax on the same"?
– Lawrence
yesterday
1
Hi, New to finance! Please note that "crore" and "lakh" are not known or used in the western world, using these might reduce the clarity of your question.
– zovits
4 hours ago
1
@zovits: TBH if you're familiar enough with the Indian tax system to answer this question, "crore" and "lakh" will be familiar.
– MSalters
41 mins ago
add a comment |Â
up vote
7
down vote
favorite
up vote
7
down vote
favorite
If my friend transfers INR 10,000,000 into my bank account and we make a legal document for the same to return the amount at 7% per annum for next 12 yrs, should I pay tax on the same?
If my salary is INR 150,000 per month, and I pay INR 60,000 per month to my friend to repay the debt, will income tax be deducted as if I were earning only INR 90,000/month, or will income tax be deducted from the INR 150,000 /month salary, and I have to pay INR 60,000 each month to my friend from what is left of my salary after the income tax is deducted?
income-tax india tax-deduction debt personal-loan
edited 15 mins ago
RonJohn
11.7k41950
asked yesterday
New to finance
3912
New contributor
New to finance is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
If my friend transfers INR 10,000,000 into my bank account and we make a legal document for the same to return the amount at 7% per annum for next 12 yrs, should I pay tax on the same?
If my salary is INR 150,000 per month, and I pay INR 60,000 per month to my friend to repay the debt, will income tax be deducted as if I were earning only INR 90,000/month, or will income tax be deducted from the INR 150,000 /month salary, and I have to pay INR 60,000 each month to my friend from what is left of my salary after the income tax is deducted?
income-tax india tax-deduction debt personal-loan
income-tax india tax-deduction debt personal-loan
edited 15 mins ago
RonJohn
11.7k41950
asked yesterday
New to finance
3912
New contributor
New to finance is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
edited 15 mins ago
RonJohn
11.7k41950
asked yesterday
New to finance
3912
New contributor
New to finance is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
edited 15 mins ago
RonJohn
11.7k41950
edited 15 mins ago
RonJohn
11.7k41950
edited 15 mins ago
RonJohn
11.7k41950
11.7k41950
asked yesterday
New to finance
3912
New contributor
New to finance is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
asked yesterday
New to finance
3912
asked yesterday
New to finance
3912
3912
New contributor
New to finance is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
New contributor
New to finance is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
New to finance is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
2
The interest income goes to your friend, and in Australia (not sure about India), borrowed principal isn't taxed. What tax are you asking about when you say "tax on the same"?
– Lawrence
yesterday
1
Hi, New to finance! Please note that "crore" and "lakh" are not known or used in the western world, using these might reduce the clarity of your question.
– zovits
4 hours ago
1
@zovits: TBH if you're familiar enough with the Indian tax system to answer this question, "crore" and "lakh" will be familiar.
– MSalters
41 mins ago
add a comment |Â
2
The interest income goes to your friend, and in Australia (not sure about India), borrowed principal isn't taxed. What tax are you asking about when you say "tax on the same"?
– Lawrence
yesterday
1
Hi, New to finance! Please note that "crore" and "lakh" are not known or used in the western world, using these might reduce the clarity of your question.
– zovits
4 hours ago
1
@zovits: TBH if you're familiar enough with the Indian tax system to answer this question, "crore" and "lakh" will be familiar.
– MSalters
41 mins ago
2
2
The interest income goes to your friend, and in Australia (not sure about India), borrowed principal isn't taxed. What tax are you asking about when you say "tax on the same"?
– Lawrence
yesterday
The interest income goes to your friend, and in Australia (not sure about India), borrowed principal isn't taxed. What tax are you asking about when you say "tax on the same"?
– Lawrence
yesterday
1
1
Hi, New to finance! Please note that "crore" and "lakh" are not known or used in the western world, using these might reduce the clarity of your question.
– zovits
4 hours ago
Hi, New to finance! Please note that "crore" and "lakh" are not known or used in the western world, using these might reduce the clarity of your question.
– zovits
4 hours ago
1
1
@zovits: TBH if you're familiar enough with the Indian tax system to answer this question, "crore" and "lakh" will be familiar.
– MSalters
41 mins ago
@zovits: TBH if you're familiar enough with the Indian tax system to answer this question, "crore" and "lakh" will be familiar.
– MSalters
41 mins ago
add a comment |Â
3 Answers
3
active
oldest
votes
up vote
13
down vote
Loan repayment can't be tax deductible except for home loan. If the home loan for first house is taken from close friends and relatives, it has the same tax benefits as if taken from bank. The rate of interest in such cases can't be more than prevailing market rates.
Your friend has to pay taxes on interest income.
The numbers don't add up. On your income of 1,50,000 you would be paying tax of Rs 30,000. Take home of around 1,20,000
If you take a loan of 1,00,00,000 for 12 years at 7%; you have to pay monthly installments (i.e. EMI) of 1,03,000. So unless you plan to pay more in later years or pay for a longer duration; you cannot afford this loan.
edited 8 hours ago
Jay
764715
answered 22 hours ago
Dheer
47.9k959141
add a comment |Â
up vote
7
down vote
Welcome new user.
If YOU are getting the loan money and YOU are PAYING the interest, you do not pay any tax.
(You're not the one GETTING money.)
Your friend is GETTING money, so your friend pays tax. It is income, like any other income.
answered yesterday
Fattie
3,26521631
3
Yes but he (or she) talks about paying tax on his income. He still pays interest in after-tax money, and that interest is then again taxed because the friend earned it as income.
– Michael
19 hours ago
hi @Michael . I think you are talking about "the money the OP uses, to pay the interest" Is that right? We have no clue what that money is. It may be from savings, it may be the user's "income" or whatever. Yes, of course obviously that money would have been taxed (like every other dollar in the universe :) ) It could be you mean "there is no deduction on that interest, unlike the special case of a home loan" .. is that right?? Anyway cheers
– Fattie
18 hours ago
1
Yes, OP is taking about using his salary to repay the loan and as asked it seems to imply a possible belief or hope that double taxation won't occur, which is not the case for the interest portion of the funds.
– Michael
18 hours ago
OK .. well .. the question is very unclear, and it doesn't really mention "deduction" anywhere. Note however that if the loan IS for a home, then OP indeed DOES get the tax deduction.
– Fattie
18 hours ago
Is this applicable everywhere (including india)?
– BÈþòøћ
8 hours ago
 |Â
show 3 more comments
up vote
6
down vote
This is a fantastic deal for the OP who truly has an extraordinarily generous friend. Note that monthly payments of INR 60K for 12 years add up to INR 8640K which is less than the INR 10000K that was borrowed. So, unless the OP is planning on an unmentioned balloon payment at the end of the 12 years, the loan will still not have been paid off in 12 years and the remainder of the loan amount (plus interest over the 12-year period) is being forgiven (i.e., is a gift from the friend. For an actual loan of INR 1 crore at 7% to be paid back over 12 years from, say, a bank, the monthly payment (EMI) is about INR 1,02,840, and the sum total of payments is a little over INR 1.48 crore.
There is no income tax due from the OP on the loan proceeds of INR 1 crore received from the friend; amounts received as loans are not taxable income to the borrower. The transaction might be subject to the new GST tax but that's a separate issue. The interest component of the monthly repayment (EMI) is taxable income to the OP's friend; the component of the EMI that represents principal is not taxable income to the OP's friend. No part of the EMI can be deducted from gross income to arrive at the taxable income, unless the loan is structured as a mortgage secured by the OP's home.
answered 22 hours ago
Dilip Sarwate
23.7k23291
3
So... you’re saying it’s a great deal, only having to pay back ~86% of the principle.
– HopelessN00b
21 hours ago
add a comment |Â
3 Answers
3
active
oldest
votes
3 Answers
3
active
oldest
votes
active
oldest
votes
active
oldest
votes
up vote
13
down vote
Loan repayment can't be tax deductible except for home loan. If the home loan for first house is taken from close friends and relatives, it has the same tax benefits as if taken from bank. The rate of interest in such cases can't be more than prevailing market rates.
Your friend has to pay taxes on interest income.
The numbers don't add up. On your income of 1,50,000 you would be paying tax of Rs 30,000. Take home of around 1,20,000
If you take a loan of 1,00,00,000 for 12 years at 7%; you have to pay monthly installments (i.e. EMI) of 1,03,000. So unless you plan to pay more in later years or pay for a longer duration; you cannot afford this loan.
edited 8 hours ago
Jay
764715
answered 22 hours ago
Dheer
47.9k959141
add a comment |Â
up vote
13
down vote
Loan repayment can't be tax deductible except for home loan. If the home loan for first house is taken from close friends and relatives, it has the same tax benefits as if taken from bank. The rate of interest in such cases can't be more than prevailing market rates.
Your friend has to pay taxes on interest income.
The numbers don't add up. On your income of 1,50,000 you would be paying tax of Rs 30,000. Take home of around 1,20,000
If you take a loan of 1,00,00,000 for 12 years at 7%; you have to pay monthly installments (i.e. EMI) of 1,03,000. So unless you plan to pay more in later years or pay for a longer duration; you cannot afford this loan.
edited 8 hours ago
Jay
764715
answered 22 hours ago
Dheer
47.9k959141
add a comment |Â
up vote
13
down vote
up vote
13
down vote
Loan repayment can't be tax deductible except for home loan. If the home loan for first house is taken from close friends and relatives, it has the same tax benefits as if taken from bank. The rate of interest in such cases can't be more than prevailing market rates.
Your friend has to pay taxes on interest income.
The numbers don't add up. On your income of 1,50,000 you would be paying tax of Rs 30,000. Take home of around 1,20,000
If you take a loan of 1,00,00,000 for 12 years at 7%; you have to pay monthly installments (i.e. EMI) of 1,03,000. So unless you plan to pay more in later years or pay for a longer duration; you cannot afford this loan.
edited 8 hours ago
Jay
764715
answered 22 hours ago
Dheer
47.9k959141
Loan repayment can't be tax deductible except for home loan. If the home loan for first house is taken from close friends and relatives, it has the same tax benefits as if taken from bank. The rate of interest in such cases can't be more than prevailing market rates.
Your friend has to pay taxes on interest income.
The numbers don't add up. On your income of 1,50,000 you would be paying tax of Rs 30,000. Take home of around 1,20,000
If you take a loan of 1,00,00,000 for 12 years at 7%; you have to pay monthly installments (i.e. EMI) of 1,03,000. So unless you plan to pay more in later years or pay for a longer duration; you cannot afford this loan.
edited 8 hours ago
Jay
764715
answered 22 hours ago
Dheer
47.9k959141
edited 8 hours ago
Jay
764715
edited 8 hours ago
Jay
764715
edited 8 hours ago
Jay
764715
764715
answered 22 hours ago
Dheer
47.9k959141
answered 22 hours ago
Dheer
47.9k959141
answered 22 hours ago
Dheer
47.9k959141
47.9k959141
add a comment |Â
add a comment |Â
up vote
7
down vote
Welcome new user.
If YOU are getting the loan money and YOU are PAYING the interest, you do not pay any tax.
(You're not the one GETTING money.)
Your friend is GETTING money, so your friend pays tax. It is income, like any other income.
answered yesterday
Fattie
3,26521631
3
Yes but he (or she) talks about paying tax on his income. He still pays interest in after-tax money, and that interest is then again taxed because the friend earned it as income.
– Michael
19 hours ago
hi @Michael . I think you are talking about "the money the OP uses, to pay the interest" Is that right? We have no clue what that money is. It may be from savings, it may be the user's "income" or whatever. Yes, of course obviously that money would have been taxed (like every other dollar in the universe :) ) It could be you mean "there is no deduction on that interest, unlike the special case of a home loan" .. is that right?? Anyway cheers
– Fattie
18 hours ago
1
Yes, OP is taking about using his salary to repay the loan and as asked it seems to imply a possible belief or hope that double taxation won't occur, which is not the case for the interest portion of the funds.
– Michael
18 hours ago
OK .. well .. the question is very unclear, and it doesn't really mention "deduction" anywhere. Note however that if the loan IS for a home, then OP indeed DOES get the tax deduction.
– Fattie
18 hours ago
Is this applicable everywhere (including india)?
– BÈþòøћ
8 hours ago
 |Â
show 3 more comments
up vote
7
down vote
Welcome new user.
If YOU are getting the loan money and YOU are PAYING the interest, you do not pay any tax.
(You're not the one GETTING money.)
Your friend is GETTING money, so your friend pays tax. It is income, like any other income.
answered yesterday
Fattie
3,26521631
3
Yes but he (or she) talks about paying tax on his income. He still pays interest in after-tax money, and that interest is then again taxed because the friend earned it as income.
– Michael
19 hours ago
hi @Michael . I think you are talking about "the money the OP uses, to pay the interest" Is that right? We have no clue what that money is. It may be from savings, it may be the user's "income" or whatever. Yes, of course obviously that money would have been taxed (like every other dollar in the universe :) ) It could be you mean "there is no deduction on that interest, unlike the special case of a home loan" .. is that right?? Anyway cheers
– Fattie
18 hours ago
1
Yes, OP is taking about using his salary to repay the loan and as asked it seems to imply a possible belief or hope that double taxation won't occur, which is not the case for the interest portion of the funds.
– Michael
18 hours ago
OK .. well .. the question is very unclear, and it doesn't really mention "deduction" anywhere. Note however that if the loan IS for a home, then OP indeed DOES get the tax deduction.
– Fattie
18 hours ago
Is this applicable everywhere (including india)?
– BÈþòøћ
8 hours ago
 |Â
show 3 more comments
up vote
7
down vote
up vote
7
down vote
Welcome new user.
If YOU are getting the loan money and YOU are PAYING the interest, you do not pay any tax.
(You're not the one GETTING money.)
Your friend is GETTING money, so your friend pays tax. It is income, like any other income.
answered yesterday
Fattie
3,26521631
Welcome new user.
If YOU are getting the loan money and YOU are PAYING the interest, you do not pay any tax.
(You're not the one GETTING money.)
Your friend is GETTING money, so your friend pays tax. It is income, like any other income.
answered yesterday
Fattie
3,26521631
answered yesterday
Fattie
3,26521631
answered yesterday
Fattie
3,26521631
answered yesterday
Fattie
3,26521631
3,26521631
3
Yes but he (or she) talks about paying tax on his income. He still pays interest in after-tax money, and that interest is then again taxed because the friend earned it as income.
– Michael
19 hours ago
hi @Michael . I think you are talking about "the money the OP uses, to pay the interest" Is that right? We have no clue what that money is. It may be from savings, it may be the user's "income" or whatever. Yes, of course obviously that money would have been taxed (like every other dollar in the universe :) ) It could be you mean "there is no deduction on that interest, unlike the special case of a home loan" .. is that right?? Anyway cheers
– Fattie
18 hours ago
1
Yes, OP is taking about using his salary to repay the loan and as asked it seems to imply a possible belief or hope that double taxation won't occur, which is not the case for the interest portion of the funds.
– Michael
18 hours ago
OK .. well .. the question is very unclear, and it doesn't really mention "deduction" anywhere. Note however that if the loan IS for a home, then OP indeed DOES get the tax deduction.
– Fattie
18 hours ago
Is this applicable everywhere (including india)?
– BÈþòøћ
8 hours ago
 |Â
show 3 more comments
3
Yes but he (or she) talks about paying tax on his income. He still pays interest in after-tax money, and that interest is then again taxed because the friend earned it as income.
– Michael
19 hours ago
hi @Michael . I think you are talking about "the money the OP uses, to pay the interest" Is that right? We have no clue what that money is. It may be from savings, it may be the user's "income" or whatever. Yes, of course obviously that money would have been taxed (like every other dollar in the universe :) ) It could be you mean "there is no deduction on that interest, unlike the special case of a home loan" .. is that right?? Anyway cheers
– Fattie
18 hours ago
1
Yes, OP is taking about using his salary to repay the loan and as asked it seems to imply a possible belief or hope that double taxation won't occur, which is not the case for the interest portion of the funds.
– Michael
18 hours ago
OK .. well .. the question is very unclear, and it doesn't really mention "deduction" anywhere. Note however that if the loan IS for a home, then OP indeed DOES get the tax deduction.
– Fattie
18 hours ago
Is this applicable everywhere (including india)?
– BÈþòøћ
8 hours ago
3
3
Yes but he (or she) talks about paying tax on his income. He still pays interest in after-tax money, and that interest is then again taxed because the friend earned it as income.
– Michael
19 hours ago
Yes but he (or she) talks about paying tax on his income. He still pays interest in after-tax money, and that interest is then again taxed because the friend earned it as income.
– Michael
19 hours ago
hi @Michael . I think you are talking about "the money the OP uses, to pay the interest" Is that right? We have no clue what that money is. It may be from savings, it may be the user's "income" or whatever. Yes, of course obviously that money would have been taxed (like every other dollar in the universe :) ) It could be you mean "there is no deduction on that interest, unlike the special case of a home loan" .. is that right?? Anyway cheers
– Fattie
18 hours ago
hi @Michael . I think you are talking about "the money the OP uses, to pay the interest" Is that right? We have no clue what that money is. It may be from savings, it may be the user's "income" or whatever. Yes, of course obviously that money would have been taxed (like every other dollar in the universe :) ) It could be you mean "there is no deduction on that interest, unlike the special case of a home loan" .. is that right?? Anyway cheers
– Fattie
18 hours ago
1
1
Yes, OP is taking about using his salary to repay the loan and as asked it seems to imply a possible belief or hope that double taxation won't occur, which is not the case for the interest portion of the funds.
– Michael
18 hours ago
Yes, OP is taking about using his salary to repay the loan and as asked it seems to imply a possible belief or hope that double taxation won't occur, which is not the case for the interest portion of the funds.
– Michael
18 hours ago
OK .. well .. the question is very unclear, and it doesn't really mention "deduction" anywhere. Note however that if the loan IS for a home, then OP indeed DOES get the tax deduction.
– Fattie
18 hours ago
OK .. well .. the question is very unclear, and it doesn't really mention "deduction" anywhere. Note however that if the loan IS for a home, then OP indeed DOES get the tax deduction.
– Fattie
18 hours ago
Is this applicable everywhere (including india)?
– BÈþòøћ
8 hours ago
Is this applicable everywhere (including india)?
– BÈþòøћ
8 hours ago
 |Â
show 3 more comments
up vote
6
down vote
This is a fantastic deal for the OP who truly has an extraordinarily generous friend. Note that monthly payments of INR 60K for 12 years add up to INR 8640K which is less than the INR 10000K that was borrowed. So, unless the OP is planning on an unmentioned balloon payment at the end of the 12 years, the loan will still not have been paid off in 12 years and the remainder of the loan amount (plus interest over the 12-year period) is being forgiven (i.e., is a gift from the friend. For an actual loan of INR 1 crore at 7% to be paid back over 12 years from, say, a bank, the monthly payment (EMI) is about INR 1,02,840, and the sum total of payments is a little over INR 1.48 crore.
There is no income tax due from the OP on the loan proceeds of INR 1 crore received from the friend; amounts received as loans are not taxable income to the borrower. The transaction might be subject to the new GST tax but that's a separate issue. The interest component of the monthly repayment (EMI) is taxable income to the OP's friend; the component of the EMI that represents principal is not taxable income to the OP's friend. No part of the EMI can be deducted from gross income to arrive at the taxable income, unless the loan is structured as a mortgage secured by the OP's home.
answered 22 hours ago
Dilip Sarwate
23.7k23291
3
So... you’re saying it’s a great deal, only having to pay back ~86% of the principle.
– HopelessN00b
21 hours ago
add a comment |Â
up vote
6
down vote
This is a fantastic deal for the OP who truly has an extraordinarily generous friend. Note that monthly payments of INR 60K for 12 years add up to INR 8640K which is less than the INR 10000K that was borrowed. So, unless the OP is planning on an unmentioned balloon payment at the end of the 12 years, the loan will still not have been paid off in 12 years and the remainder of the loan amount (plus interest over the 12-year period) is being forgiven (i.e., is a gift from the friend. For an actual loan of INR 1 crore at 7% to be paid back over 12 years from, say, a bank, the monthly payment (EMI) is about INR 1,02,840, and the sum total of payments is a little over INR 1.48 crore.
There is no income tax due from the OP on the loan proceeds of INR 1 crore received from the friend; amounts received as loans are not taxable income to the borrower. The transaction might be subject to the new GST tax but that's a separate issue. The interest component of the monthly repayment (EMI) is taxable income to the OP's friend; the component of the EMI that represents principal is not taxable income to the OP's friend. No part of the EMI can be deducted from gross income to arrive at the taxable income, unless the loan is structured as a mortgage secured by the OP's home.
answered 22 hours ago
Dilip Sarwate
23.7k23291
3
So... you’re saying it’s a great deal, only having to pay back ~86% of the principle.
– HopelessN00b
21 hours ago
add a comment |Â
up vote
6
down vote
up vote
6
down vote
This is a fantastic deal for the OP who truly has an extraordinarily generous friend. Note that monthly payments of INR 60K for 12 years add up to INR 8640K which is less than the INR 10000K that was borrowed. So, unless the OP is planning on an unmentioned balloon payment at the end of the 12 years, the loan will still not have been paid off in 12 years and the remainder of the loan amount (plus interest over the 12-year period) is being forgiven (i.e., is a gift from the friend. For an actual loan of INR 1 crore at 7% to be paid back over 12 years from, say, a bank, the monthly payment (EMI) is about INR 1,02,840, and the sum total of payments is a little over INR 1.48 crore.
There is no income tax due from the OP on the loan proceeds of INR 1 crore received from the friend; amounts received as loans are not taxable income to the borrower. The transaction might be subject to the new GST tax but that's a separate issue. The interest component of the monthly repayment (EMI) is taxable income to the OP's friend; the component of the EMI that represents principal is not taxable income to the OP's friend. No part of the EMI can be deducted from gross income to arrive at the taxable income, unless the loan is structured as a mortgage secured by the OP's home.
answered 22 hours ago
Dilip Sarwate
23.7k23291
This is a fantastic deal for the OP who truly has an extraordinarily generous friend. Note that monthly payments of INR 60K for 12 years add up to INR 8640K which is less than the INR 10000K that was borrowed. So, unless the OP is planning on an unmentioned balloon payment at the end of the 12 years, the loan will still not have been paid off in 12 years and the remainder of the loan amount (plus interest over the 12-year period) is being forgiven (i.e., is a gift from the friend. For an actual loan of INR 1 crore at 7% to be paid back over 12 years from, say, a bank, the monthly payment (EMI) is about INR 1,02,840, and the sum total of payments is a little over INR 1.48 crore.
There is no income tax due from the OP on the loan proceeds of INR 1 crore received from the friend; amounts received as loans are not taxable income to the borrower. The transaction might be subject to the new GST tax but that's a separate issue. The interest component of the monthly repayment (EMI) is taxable income to the OP's friend; the component of the EMI that represents principal is not taxable income to the OP's friend. No part of the EMI can be deducted from gross income to arrive at the taxable income, unless the loan is structured as a mortgage secured by the OP's home.
answered 22 hours ago
Dilip Sarwate
23.7k23291
edited 9 hours ago
answered 22 hours ago
Dilip Sarwate
23.7k23291
answered 22 hours ago
Dilip Sarwate
23.7k23291
answered 22 hours ago
Dilip Sarwate
23.7k23291
23.7k23291
3
So... you’re saying it’s a great deal, only having to pay back ~86% of the principle.
– HopelessN00b
21 hours ago
add a comment |Â
3
So... you’re saying it’s a great deal, only having to pay back ~86% of the principle.
– HopelessN00b
21 hours ago
3
3
So... you’re saying it’s a great deal, only having to pay back ~86% of the principle.
– HopelessN00b
21 hours ago
So... you’re saying it’s a great deal, only having to pay back ~86% of the principle.
– HopelessN00b
21 hours ago
add a comment |Â
New to finance is a new contributor. Be nice, and check out our Code of Conduct.
New to finance is a new contributor. Be nice, and check out our Code of Conduct.
New to finance is a new contributor. Be nice, and check out our Code of Conduct.
New to finance is a new contributor. Be nice, and check out our Code of Conduct.
Sign up or log in
StackExchange.ready(function ()
StackExchange.helpers.onClickDraftSave('#login-link');
);
Sign up using Google
Sign up using Facebook
Sign up using Email and Password
Post as a guest
StackExchange.ready(
function ()
StackExchange.openid.initPostLogin('.new-post-login', 'https%3a%2f%2fmoney.stackexchange.com%2fquestions%2f100692%2finr-10-million-borrowed-from-friend-at-7-interest-per-annum%23new-answer', 'question_page');
);
Post as a guest
Sign up or log in
StackExchange.ready(function ()
StackExchange.helpers.onClickDraftSave('#login-link');
);
Sign up using Google
Sign up using Facebook
Sign up using Email and Password
Post as a guest
Sign up or log in
StackExchange.ready(function ()
StackExchange.helpers.onClickDraftSave('#login-link');
);
Sign up using Google
Sign up using Facebook
Sign up using Email and Password
Post as a guest
Sign up or log in
StackExchange.ready(function ()
StackExchange.helpers.onClickDraftSave('#login-link');
);
Sign up using Google
Sign up using Facebook
Sign up using Email and Password
Sign up using Google
Sign up using Facebook
Sign up using Email and Password
2
The interest income goes to your friend, and in Australia (not sure about India), borrowed principal isn't taxed. What tax are you asking about when you say "tax on the same"?
– Lawrence
yesterday
1
Hi, New to finance! Please note that "crore" and "lakh" are not known or used in the western world, using these might reduce the clarity of your question.
– zovits
4 hours ago
1
@zovits: TBH if you're familiar enough with the Indian tax system to answer this question, "crore" and "lakh" will be familiar.
– MSalters
41 mins ago