Talking money from friend

Income Tax Income from Business or Profession
1

I’m in need of urgent money. A friend of mine is willing to give 1 lakh for 1-2 month. Can I take it? Do I’ve to do some measure.

2

Hey @Archit ,

Usually any sum of money received without consideration from other than relatives or on special ocassion is taxable as Income from other Sources. Friend is not covered within the definition of relative and thus any amount received from the friend would be considered as your income. Hence, it is better to show the same as Loan in your Balance sheet as you will be taking it for 1-2 months and returning it post that.

3

Hey @Archit,

As rightly mentioned by @garg.pulkit131, money received without consideration will be treated as gift and gifts from non-relatives are taxable if the value exceeds ₹50,000.

You will have to report it under ‘other source income’. It’ll be added to your total income and taxed at slab rate.

1 Like
4

Thanks @garg.pulkit131 @Surbhi_Pal

So, I can show the same as Loan right? Do we need to fill any forms etc for this?

5

So, the friend has to pay tax on the loan amount, then when the friend pays back, I have to pay tax on the same?

While what you are quoting may be strictly by the books, does it not defeat the purpose of a simple friendly loan? Will a loan agreement suffice to avoid these taxes?

6

When borrowing money from a friend, it is important to be honest, explain the terms clearly, and show mutual respect to avoid misunderstandings. Keep communication open and prioritize timely repayment to maintain trust.