Promissory Note Generator
A promissory note ("pronote") is a written, unconditional promise by one person (the maker or borrower) to pay a certain sum to another (the payee or lender) either on demand or on a fixed date. It is defined in Section 4 of the Negotiable Instruments Act, 1881 and is the simplest enforceable evidence of a private loan between friends, relatives, business partners or a firm and its financier. This tool drafts the note with the correct legal wording, amount in words, interest clause, consideration, place and date, a revenue stamp box and two witness lines.
Essential elements of a valid promissory note
- An unconditional promise to pay — no "if" or "subject to".
- A certain sum of money, in figures and words.
- Named maker and payee; signed by the maker.
- Payable on demand or at a fixed/determinable future time.
- Consideration ("for value received") — cash, bank transfer, goods or services.
- Date and place of execution; adequate stamp duty (revenue stamp signed across by the maker).
Interest and total payable
For a fixed-date note, simple interest = Principal × Rate × Days ÷ 365. Monthly compounding = Principal × (1 + Rate/12)months − Principal. The tool computes the indicative interest up to the due date so both parties know the expected total.
Worked example
Ramesh lends Suresh ₹1,00,000 by bank transfer on 16-10-2026 at 12% simple interest, repayable on 16-10-2027. Interest for 365 days = ₹12,000; total due on the due date = ₹1,12,000. The note names both parties with addresses, states "for value received by way of bank transfer", is signed by Suresh across a revenue stamp, and is attested by two witnesses. If Suresh defaults, Ramesh can sue within 3 years of the due date (demand notes: 3 years from the date of the note).
Promissory note vs loan agreement
A pronote is a one-sided promise and is negotiable (can be endorsed). A loan agreement is a two-sided contract with repayment schedule, security and default clauses. For loans above a few lakh rupees, or where property is pledged, use a loan agreement in addition to the note. Remember that lending or repaying ₹20,000 or more in cash violates Sections 269SS/269T of the Income-tax Act.
Frequently Asked Questions
Does a promissory note need to be registered or notarised?
No. It needs proper stamp duty and the maker's signature; witnesses are advisable but not mandatory. Notarisation is optional.
How much stamp duty applies?
Promissory notes fall under Article 49 of the Indian Stamp Act; a revenue stamp (commonly ₹1) is affixed and signed across. Check your state schedule for higher values.
What is the limitation period to recover the money?
Three years from the date of a demand note, or from the due date of a fixed-date note.
Can interest be charged on a promissory note?
Yes, any agreed rate can be stated. Where no rate is mentioned, the law provides 18% per annum under Section 80 of the NI Act.
Disclaimer: This tool is for general information and estimation only. Tax rates and rules change — verify with official sources or a professional before acting. Read full disclaimer.