Facts about tax benefits on personal loans | Fusion - WeRIndia

Facts about tax benefits on personal loans

Facts about tax benefits on personal loans

Personal loans are handy in times of need. These are unsecured loans, hence there is no need to provide any collateral to the lender.

The personal loan is approved instantly within minutes. The amount is disbursed within 24 hours in most of the cases.

The loan has a flexible term ranging from 12 months 60 months so that the borrower can pay it in affordable instalments.

The loan amount depends on several factors including your CIBIL score, repayment history etc.

However, the interest rate on personal loans is higher compared to normal loans due to the involvement of a high risk of defaulting.

If you are eligible, the creditors can provide you up to ₹25 lakh as a personal loan.

There is no need to pay tax on personal loans as these are not under the income category. Make sure that you are availing a personal loan from a bank or any other financial institute.

While availing a personal loan, a question may come to your mind that whether you can avail tax benefit on a personal loan or not.

If you take the personal loan to buy or construction of a property, then you can claim the interest paid on it as an exemption under Section 24 of the Income Tax Act.

You can get a tax deduction of up to ₹2 lakh for a self-owned home. You are eligible for the amount of interest paid on a personal loan as a tax deduction for a rented house.

You have to submit documents to avail the benefits that you used the money for your home.

If you utilize the loan amount for your business, then you can get benefit to the extent of interest paid on the loan amount. The interest amount can be added to the cost of acquisition which reduces the capital gains and thereby tax liability.

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