• Investment return as income source

Hi Sir,

I am planning to invested in a sole proprietorship business for 10% return monthly. I will be getting a legal agreement containing all the terms regarding the investment and its return policies.  

My doubt is , since I am not an financial institution, am I legally eligible to do such investments. Can I show the income source of 10% while doing Tax filling?

Thanks in Advance

Regards,
Unni
Asked 6 years ago in Income Tax

Hi Unni,

I don't see any issue in this transaction. You can lend money your money to earn interest.

Abhishek Dugar
CA, Mumbai
3576 Answers
183 Consultations

4.8 on 5.0

Yes you can show this income under the head income form other sources while filling income tax return

Mohit Agarwal
CA, Agra
37 Answers
1 Consultation

4.3 on 5.0

Sir, It is more like you have provided loan to a sole proprietorship business against 10% interest. Yes, it will be taxable as Income from other source

Vidya Jain
CA, Kolkata
1008 Answers
58 Consultations

4.8 on 5.0

Hi Unni,

As per my understanding, you are lending money to that sole proprietorship and will earn monthly interest. You are not getting any share in the profit.

You are allowed to enter into such lending transactions, provided they are routed through a bank account (cheque/electronic transfer).

The income which you will earn will be interest income and is taxable as Income from Other Source.

Trust this clarifies.

Regards,

Keerthiga Padmanabhan

M.Com., CA, LLB

Keerthiga Padmanabhan
CA, Greater Mumbai
784 Answers
27 Consultations

5.0 on 5.0

Yes, ypu can do multiple type of services.

GST and Income tax two different kind of taxes. Yes, you have to pay both. However, applicability of GST differes in different kind of scenerios

Vidya Jain
CA, Kolkata
1008 Answers
58 Consultations

4.8 on 5.0

Hi Unni,

You can do multiple business under your proprietorship.

Yes, you have to compulsorily pay income tax. As far as GST is concerned, if your total turnover does not exceed 20 lacs and you don't provide inter state services, you don't need to register and pay GST.

Abhishek Dugar
CA, Mumbai
3576 Answers
183 Consultations

4.8 on 5.0

Hello,

Yes, you will have to pay GST as well as Income Tax on your income.

Trust this clarifies your query.

Feel free to call / get back in case of further clarifications.

Thanking You.

Regards,

Rohit R Sharma

BCOM, ACA, LLB-GEN, CERT. FAFP

Rohit R Sharma
CA, Mumbai
2104 Answers
95 Consultations

5.0 on 5.0

Income tax and GST are two different taxes and both will be payable as per the relevant provisions of the said Acts.

Regards,

Keerthiga Padmanabhan

M.Com., CA, LL.B

Keerthiga Padmanabhan
CA, Greater Mumbai
784 Answers
27 Consultations

5.0 on 5.0

Hello,

This is very difficult to say unless we understand the exact modus operandi of how you do what you do. A slight here and there may make a difference.

Rohit R Sharma
CA, Mumbai
2104 Answers
95 Consultations

5.0 on 5.0

Hi,

There is nothing that bars you from lending money on interest. You can show the interest earned as Income in IT Returns.

Having an agreement is advisable

Pradeep Bhat
CA, Bengaluru
542 Answers
94 Consultations

5.0 on 5.0

Hi Unki,

This website is mainly focused in tax. For legal implication, best source would be to raise query at www.kaanoon.com.

Please feel free to call/ revert in case you need more clarity.

Thanks and regards

Abhishek Dugar

CA CS B.Com

Abhishek Dugar
CA, Mumbai
3576 Answers
183 Consultations

4.8 on 5.0

Hi

Agreement is good to have but not must.

Please feel free to call/ revert in case you need more clarity.

Thanks and regards

Abhishek Dugar

CA CS B.Com

Abhishek Dugar
CA, Mumbai
3576 Answers
183 Consultations

4.8 on 5.0

That is difficult to comment upon. Will have to understand you entire business strategy.

Regards,

Keerthiga Padmanabhan

M.Com., CA, LL.B

Keerthiga Padmanabhan
CA, Greater Mumbai
784 Answers
27 Consultations

5.0 on 5.0

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