TaxTMI 
TaxTMI 
Does short term amount borrowed from parents from bank which will be returned in 2 months requires notional interest for income tax? or gift deed needed?
Short term amount received from parents returned within 2 months
09 Jun 2026 
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Interest-free family loan: no notional interest tax usually arises when parents advance and recover only principal.
Short-term interest-free loan received from parents and repaid within two months is generally not treated as taxable income merely because no interest is charged. A genuine family loan, supported by a banking trail and simple documentation showing the amount, date, and repayment terms, does not ordinarily require a gift deed. The amount should be recorded as a loan rather than a gift if repayment is intended, and proof of repayment strengthens the position that the transaction is not a disguised gift. For the parents, only actual interest received or accrued would ordinarily be taxable as interest income; no notional interest is generally brought to tax in the absence of a specific deeming provision. (AI Summary)
Short-term interest-free loan received from parents and repaid within two months is generally not treated as taxable income merely because no interest is charged. A genuine family loan, supported by a banking trail and simple documentation showing the amount, date, and repayment terms, does not ordinarily require a gift deed. The amount should be recorded as a loan rather than a gift if repayment is intended, and proof of repayment strengthens the position that the transaction is not a disguised gift. For the parents, only actual interest received or accrued would ordinarily be taxable as interest income; no notional interest is generally brought to tax in the absence of a specific deeming provision. (AI Summary)