TaxTMI 
TaxTMI 
In case a pvt ltd wnats to extend loan to another pvt ltd company, where both companies have same directors, can such loan be interest free? if not what other ways can be used to deploy funds in the other group company?
Inter corporate loans, interest
10 Jun 2025 
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Intercorporate loans: interest free advances between related private companies raise statutory compliance and tax scrutiny.
Whether a private company may extend an interest free loan to another private company with common directors raises statutory and tax compliance concerns; statutory exemptions for private to private transactions are narrow, and requirements for minimum interest on inter corporate advances and attendant tax scrutiny make interest free advances risky. Safer alternatives include equity infusion, share application money, or low interest intercompany deposits that better satisfy governance, disclosure, and tax considerations. (AI Summary)
Whether a private company may extend an interest free loan to another private company with common directors raises statutory and tax compliance concerns; statutory exemptions for private to private transactions are narrow, and requirements for minimum interest on inter corporate advances and attendant tax scrutiny make interest free advances risky. Safer alternatives include equity infusion, share application money, or low interest intercompany deposits that better satisfy governance, disclosure, and tax considerations. (AI Summary)