No, a personal loan used for personal spending does not reduce your tax, and the equated monthly instalment (EMI) is not a deduction, so it gives no zero tax benefit. Tax treatment may differ when a loan funds a home or a business, so ask a tax adviser.
Worked example: Simran in Ludhiana
Simran is 26 and works as a salaried graphic designer in Ludhiana. She earns Rs. 7.75 lakh a year (Rs. 64,583 a month), pays zero tax under the new regime and has a CIBIL score of 740. She borrows Rs. 1.25 lakh for a laptop and course fees, at an illustrative 16% per annum.
EMI = P × R × (1 + R)^N ÷ [(1 + R)^N − 1]. P is the loan amount in rupees, R is the annual rate divided by 12 and by 100, and N is the tenure in months. The formula spreads the principal and interest into equal monthly payments, so early EMIs carry more interest and later ones more principal. All figures are rounded to the nearest rupee.
| Tenure | Monthly EMI (Rs.) | Total interest (Rs.) | EMI as share of salary (%) |
|---|
| 12 months (1 year) | 11,341 | 11,096 | 17.6 |
| 24 months (2 years) | 6,120 | 21,889 | 9.5 |
Last updated: 19th October, 2026
The 24-month option lowers the EMI by Rs. 5,221 but adds Rs. 10,793 in interest. The processing fee on Rs. 1.25 lakh is up to Rs. 5,162. Simran picks 24 months (2 years), so the EMI fits her monthly budget even with zero tax to pay.
What can delay approval: a CIBIL score below 650 or existing EMIs that take up a large share of your income. Names or addresses that do not match across documents, and more than one loan application in the same month, can also slow it down.
Paying zero tax and planning a purchase? With a Bajaj Finance Personal Loan, you can borrow Rs. Rs. 40,000 to Rs. Rs. 55 lakh, subject to eligibility. Check your loan offer with your phone number and a one-time password (OTP) → apply online in about 5 minutes → receive funds within 24 hours* of approval.
