TaxTMI 
TaxTMI 
Inter corporate loans, interest
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....nter corporate loans, interest<br> Query (Issue) Started By: - Nishtha Jain Dated:- 10-6-2025 Last Reply Date:- 18-6-2025 Corporate Laws / SEBI / LLP<br>Got 1 Reply<br>Companies Law<br>In case a pvt l....
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....td 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 comp....
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....any? Reply By YAGAY andSUN: The Reply: A private limited company can technically extend an interest-free loan to another private limited company with common directors, provided it complies with Sect....
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....ions 185 and 186 of the Companies Act, 2013. While Section 185 permits such transactions under specific exemptions (e.g., both companies are private and no other body corporate holds shares), Section ....
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....186 mandates that inter-corporate loans should carry at least the prevailing government security interest rate. Hence, an interest-free loan may not align with Section 186 and could face compliance ri....
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....sks. Additionally, from a tax perspective, such transactions may be scrutinized for lack of commercial justification. As safer alternatives, companies may consider equity infusion, share application m....
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....oney, or low-interest inter-corporate deposits, which are more compliant and tax-efficient ways to deploy funds between group companies.<br> Discussion Forum - Knowledge Sharing ....