A personal loan is what many borrowers apply for to cover their numerous needs. Personal loans are easy to apply and are unsecured finance. It means that you don’t need to submit any collateral to get the loan approval.
Having a robust cibil score and a healthy repayment and income record can help you get the approval at a lower rate. But other than a higher loan amount, you can also avail of tax benefit on personal loans. Let’s take a look in this quick post!
Money used for business expansion
Using the personal loan for business expansion can entitle you to enjoy tax deductions. It is for the interest paid on personal loan repayments. The only condition is that you should have used the loan amount for increasing the revenue of a business.
Amount used for renovation/home improvement
If you use the personal loan amount for the renovation of the home or improvement, then Section 24 (b) of the Income Tax Act permits you. The interest paid on the repayment of up to Rs.30,000 could be asked as a deduction from taxable income. If you are using the loan amount for buying a residential house, then up to Rs.2 lakh is allowed for the interest paid.
Money used for other assets
If you use the loan money for any other assets like property, gold, jewelry, shares and more, then you can enjoy the tax benefit on personal loans. The interest paid on these is taken as the cost of asset acquisition. It also lessens the total capital gains and provides you with personal loan tax benefits.
You are now aware of the personal loan tax benefits that you can avail while using the loan amount for multiple purposes. If you plan to use the loan money for purposes as discussed, then you can pocket the personal loan tax benefits easily.
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