Personal Loan Interest Exemption In Income Tax
The big news coming for 2018 stemming from the tax reform bill passed in december 2017 is the elimination of the standard 4 050 personal tax exemption while the standard tax deduction doubles.
Personal loan interest exemption in income tax. Yes personal loans can be taken as tax exemptions in some cases. However an exception to this general rule provides that u s sourced interest income which qualifies under the portfolio interest exemption is not subject to this tax. One can avail tax benefits from their personal loan if they have used the personal loan money for the purchase or construction of a residential property the borrower can avail tax benefits for repayment of interest for the same under section 24 of the income tax act 1961.
Just as funding from it isn t considered taxable income making payments on a personal loan or on interest for it isn t deductible. Personal loans availed by customers are eligible for tax exemption only if the loan is sought for business purposes. However there are some exceptions.
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. Interest paid on personal loans is not tax deductible. While computing income chargeable to tax under the head income from house property in case of a let out property the taxpayer can claim deduction under section 24 b on account of interest on loan taken for the purpose of purchase construction repair renewal or reconstruction of the property.
Here are a list of uses for personal loans that are tax deductible. Lender is subject to a 30 tax. Personal loans are not considered as a part of income so while filling for it returns the loan amount is not going to be considered as taxable fund.
The general rule is that like rental income discussed above u s sourced interest income received by a non u s. Other than this specific case personal finance does not offer any form of tax rebate to customers.
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