I want to give 3lakhs of interest free loan to one of my relative for constructing house. Following are my queries.
1. Can I transfer money to his account through NEFT (I think I need to transfer in installment)? Or do I need to pay through cheque?
2. Will he be liable for any kind of Tax.
3. When he returns the money back (through cheque – in installement), will there be any tax implication to me?

Thanks for your help.



Admin’s Response:

Answering your queries in order:

1. You may transfer money by any means through the banking channels in lumpsum or instalments. No cash allowed if accumaulated loan exceeds Rs. 20000/-
2. No liability to tax.
3. No tax implications when the money is returned.