He can enter into a loan agreement on a Rs.100. NJS paper.

He can enter into an equitable mortgage.

He can get blank cheques or promissory notes.

He can get the property registered on his name for security purpose also.

He can check it up through internet.

1) if your friend is lending money at intetest he should obtain money lender licence

2) enter into notarised loan agreement with friends

3) no need to register loan agreement

4) lock in period on capital gain bonds has been increased to 5 years . Maximum amount that can be invested is Rs 50 lakhs

5) you can invest in bonds issued by NHAI or RECL

1. Lending the money is more risky than mutual funds. In case of mutual funds you can at least be assured of the return of money that you have invested even if the returns are low or go in negative. One just needs to sign a redemption application and the amount gets credited in the account within 3 days, whereas it will take years of court battle to recover the amount lent to an individual. So tell your friend to be wise and not lend money to people.

2. Be that as it may, if your friend wants to lend the money then tell him to execute a promissory note with the borrower and also take post dated cheques.

3. To avail of the exemption on the long term capital gain he must use the entire profit to either buy another house within two years or construct one in three years. If he had already bought a second house within a year before selling the first one, he could still avail of the tax exemption. Such capital gain exemption is reversed and the amount taxed as capital gain if the new property is sold within three years of the date of purchase/construction. This profit will be considered a short-term gain and taxed at the normal slab rates, not the 20% beneficial rate.

4. The long-term capital gain tax can also be saved under Section 54 (EC) if the capital gain is invested for three years in bonds of the National Highways Authority of India and Rural Electrification Corporation Limited within six months of selling the house.

Dear Sir,

My answers are as follows:

If he takes a promissary note ,with undated cheques for the principal and interest amounts , will it be safe and adequate?

Ans: Yes, it is good idea but see that such amounts not to be advanced for more than three persons otherwise your friend will have to take money lending licenses.

Should he make a detailed loan agreement?

Ans: Just taking signed blank promissory notes and cheques are sufficient.

If so, how to make this agreement?

Ans: As for as possible agreements may be avoided since proving of such agreements is very hard.

should it be notarised and taken on a Rs 100/- stamp paper?

Ans: Yes.

should it be registered?

Ans: If registered it is more strong but you have to pay stamp duty on it.

If the property document is given as security , can he get it mortgaged and get encumbrance certificate in his name, will it suffice?

Ans: It must be registered and entry must be made in EC.

He wants to know, how to save capitol gains tax for this amount 1 Cr, of which cost of acquisition is 35 lakhs, He doesn't want to invest in a residential house or in capitol gains bonds as it has 5 yrs lock in period and mutual funds are risky.Finance bill 2017 , GOI has allowed for investing in some bonds with 3 years lock in. How do we know details about that?

Ans: The above questions may kindly be asked to any chartered accountant for accurate suggestions.

Capital gain is calculated on the basis of the cost of the property plus any improvement cost and the index value should be deducted from the sale consideration in case of house property the amount should be utilised within 3 years from the sale of property are in any property which is purchased one year before the sale

Any person who is not licensed for lending money cannot let the money for the purpose of gain through interest this is a punishable offence and he can be charged for that

Sir lending money on interest without valid money lending.license is not.valid and illegal further recovery of same is.difficult.

So the best way to.lend money in this situation calculate the principle and interest amount treat.total.as principle amount then make agreement that you have given so amount.to.your friend as friendly loan donot mention anything of interest as interest should be inside.the.principle only.

Further for security take cheque and promissory note.

If property is give in that best way would be either agreement to sale (to protect.lenders interest) morortgage.

Further the agreement are valid duly notarized.

2. Talk to your CA he shall tell you about the investment to save the tax.

1. The query that you mentioned need 1-1 discussion.

2. He is liable to pay the LTCG tax. In term to avoid tax, he need to purchase government scheme bonds.

3. Private lending is illegal in india. So, the he should have license from government / RBI ( There is cap. ).

4. The lending agreement not only be notarized but also need to be registered with paid stamp duty.

5. You may discuss with a lawyer for more information.

Exemption is available under Section 54EC when capital gains from sale of the first property are reinvested into specific bonds.

If you are not very keen to reinvest your profit from sale of your first property into another one, then you can invest them in bonds for up to Rs. 50 lakhs issued by National Highway Authority of India (NHAI) or Rural Electrification Corporation (REC).

The money invested can be redeemed after 3 years, but they cannot be sold before the lapse of 3 years from the date of sale.

The homeowner has six month’s time to invest the profit in these bonds. But to be able to claim this exemption, you will have to invest before the tax filing deadline.

Dear Sir

1. Lending Money

a. You need to enter into financial Agreement.

b. The stamp paper will be calculated and shall be purchased.

c. This needs to be notarised is sufficient.

d. Take original sale deed copy as mortgage

e. Take few cheques as security

2. Capitalisation

Capitalisation is difference of the property purchased and sold needs to kept in capitalisation account and utilised while purchasing the property.

If your earning is more than the capitalisation interest and taxpaid, acquired then invest in the financial loans.

Feel free for any assistance

Regards

Shettar