CAF-2 · Chapter 5 · Question 5 of 10
ABC Ltd. granted a loan of Rs. 2,000,000 to an employee on 1 July 2025 at a concessional interest rate of 4% per annum. The benchmark rate specified in the law is 10%. What amount will be added to the employee's taxable salary for the tax year 2026?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) B) Rs. 120,000
Explanation
Since the loan exceeds the Rs. 1,000,000 exemption limit, the difference between the benchmark rate (10%) and the actual rate paid (4%) is taxable. 6% of Rs. 2,000,000 = Rs. 120,000.
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