Loan from relatives from NRI Accounts, FEMA

[Manivannan Srinivasan]

Bank wants the repayment from Sudha. Bank does not want any claims from > third party on the titles. > My client was running an industry which ran into problems and ultimately the owner of the industry leaving his wife. The bank is demanding the loan taken by the industry. and the widow dose not have the resouce to pay the lioability. Now, some of her relatives who are staying abroad wants to help her by providing a loan to her to discharge the bank so that she can get back her property which can be sold to repay the loan. Now the question is: 1) Whether she can take laon form the relatives from their NRI accounts and repay the loan after the property is sold and remit back the loan in forewign currency. 2) if so any income tax liability is involved? 3) What is the route to be folowed. Regards S.Manivannan >

Posts / Replies

[Rama Krishana]

There is some restriction on gift received from persons other than relatives. But if a person is taking loan for the purpose of repayment, the same can not be treated as gift as long as it is genuine one. The meaning of relatives from which gift can be obtained without any limit is giving under section 56(2)(vi) of the Income Tax Act, 1961. The borrowing of money is foreign exchange is governed by - "FOREIGN EXCHANGE MANAGEMENT (BORROWING OR LENDING IN FOREIGN EXCHANGE ) REGULATIONS, 2000" - You can find it in fema section - http://www.taxmanagementindia.com/Site-Map/FEMA/list_rule.asp?ID=172