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About this tool
Draft an acknowledgement of debt with the amount in words, simple interest to the due date and the limitation expiry.
The IOU Letter Generator writes an acknowledgement of debt — a signed statement by a borrower that a stated sum is owed on a stated date. It computes simple interest to the due date on a 365-day year, spells the amount out in the Indian numbering system, and dates the fresh three-year limitation period that section 18 of the Limitation Act, 1963 starts when the acknowledgement is signed in time. It also flags a cash loan of ₹20,000 or more, which sections 269SS and 269T of the Income-tax Act, 1961 prohibit.
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Enter the values you already know.
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Read the result and use it in your planning or reporting.
Shows both the original three-year expiry from the loan date and the fresh expiry the acknowledgement creates.
Renders the figure in crore-lakh-thousand form, the way an Indian document is expected to read.
Flags a cash loan of ₹20,000 or more, where sections 271D and 271E impose a penalty equal to the amount.
Yes, as evidence. A signed writing acknowledging a debt is admissible proof that the money is owed, and under section 18 of the Limitation Act, 1963 an acknowledgement signed before the existing limitation period expires starts a fresh period from the date of signature. It is not itself a promise to pay in the way a promissory note is.
A promissory note under section 4 of the Negotiable Instruments Act, 1881 contains an unconditional undertaking to pay a certain sum, is negotiable, and attracts ad valorem stamp duty under Article 49 of Schedule I to the Indian Stamp Act. An IOU merely acknowledges the debt and is chargeable under Article 1 at a nominal rate, which is why a revenue stamp is affixed rather than stamp paper bought.
Three years. Articles 19 and 21 of the Limitation Act, 1963 give three years from the date the loan was made for a suit to recover money lent. A written, signed acknowledgement obtained inside that window resets the three years from the date of signature.
No. Section 269SS of the Income-tax Act, 1961 bars accepting a loan or deposit of ₹20,000 or more otherwise than by account payee cheque, draft or electronic transfer, and section 269T applies the same limit to repayment. The penalty under sections 271D and 271E equals the amount involved. Use a bank channel and consult a tax professional.
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