Is Personal Loan Interest Tax Deductible In India
Thankfully interests paid on personal loans are allowed as deduction under the income tax act in some cases.
Is personal loan interest tax deductible in india. If you borrow to buy a car for personal use or to cover other personal expenses the interest you pay on that loan does not reduce your tax. Personal loans for your house. The indian income tax act ita does not explicitly mention anything about personal loans.
Some of the most important aspects of tax benefits on home loans in india are listed below. Most people wrongly assume that all loans carry the same tax benefits. However the income tax act offers tax benefits for other loans like education loans home loans etc.
Interest payable on a fresh loan taken to repay the original loan raised earlier for the aforesaid purposes is also admissible as a deduction. Personal loans do come with tax benefits depending on the end use of the loan amount. The amount of interest which can be claimed as deduction is currently capped at rs 3 5 lakh for the above category those buying house under affordable housing scheme.
However deductions are allowed depending upon the purpose of the loan. There is no mention of any special deductions for personal loans under the indian income tax act but there are tax deductions for other regular loans such as education loan home loan etc. As per income tax laws an individual can claim interest paid on housing loan as a deduction from gross total income.
But this does not mean that one cannot avail tax benefits under the personal loan. Interest paid on personal loans is not tax deductible. This doesn t mean you cannot avail tax benefits when you take a personal loan.
Interest payable on loans borrowed for the purpose of acquisition construction repairs renewal or reconstruction can be claimed as deduction. Tax benefits for personal loans in india. Although there are certain tax benefits on an education loan or home loan there are no personal loan tax exemptions under the indian income tax act 1961.
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