We would like to bring in your kind attention 3 most important aspect of Personal loan and its legal implications in India
1. No…….because loan is not an income , unless you can prove the identity ,genuineness and credit worthiness of the person who has given you Personal loan.
As per section 68 of the Income Tax Act , if the aforesaid things are not proved, the income tax authority may add the amount of loan as your income .
2. If you receive loan in cash exceeding Rs 20000 , there is a provision of penalty u/s 271D in the Income Tax Act .
Similarly , if you repay loan in excess of Rs 20000 in a year in Cash , there will be equal amount of penalty u/s 271E of the Income Tax Act.
3. If you are having shareholding in a private limited company , and that company advances you loan when it has accumulated profit in its balance sheet, the amount of loan may be treated as taxable dividend also popularly known as “Deemed Dividend”
So , while the loan is not an income , one should be careful about it.