When you apply for an instant personal loan, you can be assured that you will receive funds without delay. And as most of these are unsecured loans it’s a boon that you don’t have to keep any collateral or provide the lender with any form of security to avail it. The loan is approved by the lender as per your credit history, and your worthiness, which is mostly determined by the CIBIL score you have, and your paying back record. Therefore, the loan interest rates in personal loans are always a bit on the higher side, as that gives the lenders a scope to cover any risks in case of any kind of defaults.
So, if you are eligible for the loan, you can get up to INR 25 lakh from the financial institutions like Sugmya Finance, directly by applying online from Sufinn.com. Having said that, you must be wondering if personal loan is taxable or not. Or if you can avail loan tax benefits with personal loans. Mostly, personal loans are not taxable at all. The reason being that the loan amount that is lent is not a part of an individual’s income while one files for an income tax return. It generally means that as an individual, you are not required to pay any income tax as per the personal loan you have availed for. But it is always good to ensure that you always take any kind of Best personal loan from a legal source like banks and other financial institutions.
Tax benefits that you can get on personal loans
Any kind of personal loans, be it car loans or auto loans, it always comes with certain tax benefits, and also it kind of depends on the usage that is being done with it. The Income Tax Act of India permits that tax can be deducted on loans that consider the purposes of the following;
- Education
- Home renovation or buying a property
- Expanding business and more
Personal loans that are taken for home renovations
When you avail for a personal loan for buying a property, or constructing one, you can always claim the rate of interest paid on that, it is an exemption to an individual from their taxable income. And it is allowed as per Section 24 of the Income Tax Act.
And thereby, if you have a sanctioned personal loan for renovating your home or buying a home, then also you will be entitled to a tax exemption under Section 24(b).
Just so you know, you can receive a deduction up to INR 2 lakh for having a home to yourself. Whereas, when you rent an apartment for yourself, the total amount paid as interest will qualify for the tax benefits. But you need to have proper and relevant document for the money used.
When you use personal loans for business purposes
After having availed a personal loan to be used in business, or for owning any kind of asset other than property. Then the interest that you are entitled to pay will be added to the cost of acquisition. This in turn will lead to a lowering of the capital gained and thereby reduce the tax liability.