If you use the personal loan to buy or construct a house or for any business purpose, you can get tax deduction.
By Tax Guru
An instant personal loan is one of the key financial tools that can provide you with funds without delays. Since these are unsecured loans you don’t need to provide any collateral or security to the lender to get it. The loan could be availed as per your creditworthiness, which is determined by your CIBIL score and repayment record. As a result, the personal loan interest rates are a bit on the higher side as lenders do that to cover their risks of possible defaults.
If you have the required personal loan eligibility, you can get up to Rs 25 lakh from known creditors.
But, after having said that, is a personal loan taxable? Can you avail some tax benefit on personal loans or not?
Generally, personal loans are not at all taxable. It is because the loan amount is not considered as a part of one’s income while filing income tax return. It means that you are not required to pay any income tax on personal loans. But, ensure that you avail the loan from a legal source such as a bank or other financial institutes.
Tax benefits on personal loans
Personal loans also come with some tax benefits and it depends on the usage that has been made with it. The Income Tax Act of India permits tax deductions on loans for some purposes like education, home renovation or purchase, business expansions and more.
Personal loans taken for house
If you use the personal loan for buying or construction of a property, then you can claim the interest paid on it as an exemption from the taxable income. Section 24 of the Income Tax Act allows it.
As a result, if you secured an instant personal loan to renovate or buy a house, then you would be entitled to tax deductions under Section 24(b).
You can get deduction up to Rs 2 lakh for a self-owned home. On the other hand, the total interest paid on personal loans would qualify for tax benefits for a rented house. You need to have proper documentation that you used the loan money for your home to become eligible.
For business purposes
Have you used the personal loan amount for any business purpose or for buying any assets other than property? Then, the interest paid would be added to the cost of acquisition. This will lead to reduction of capital gains and, in turn, will reduce your tax liability.
If you are looking to apply for an instant personal loan, then you can enjoy many benefits from an online lender.
Loan amount of up to Rs 25 lakh: A lender can give you personal loan up to a maximum of Rs 25 lakh.
Quick approvals and faster disbursals: You can fill the online loan application form and get the loan approval within five minutes. What’s more, lenders won’t keep you waiting for the money as it can be disbursed within 24 hours.
Flexible tenor: You can opt for tenors ranging from 12 months to 60 months to spread the cost of the loan as per your needs and pay in affordable instalments.