2 min read
25 May 2021

Taking a loan is not only a good source of finance, but it can also help you bolster your savings while reducing your tax liability. Take a look at how various loans for chartered accountants can help you.

Personal loan and business loan for chartered accountants

Have you dreamt of adding a terrace garden to your home? Or do you want to upgrade your office’s computers and accounting software? For personal and professional needs, you can use a personal loan or business loan customised for chartered accountants like you. Improve your quality of life with the former, and use the latter to be the best professional that you can be. So, if you’re looking to expand the reach of your CA business, applying for a loan for chartered accountants should be on the cards.

No need to risk your assets
Since you don’t have to procure business or personal assets to mortgage in exchange for funds, these loans immediately reduce the financial burden on your shoulders. You don’t have to risk your assets in exchange for funds, making the process affordable, convenient and stress-free.

Access to a Flexi loan
A Flexi loan gives you the chance to borrow funds against a credit line, as and when the need arises. While you can make as many withdrawals as you wish, the financial benefit is that you only have to pay interest on the amount you use, not the entire loan amount. You can withdraw, repay and re-borrow funds as many times as you wish. Moreover, you have the option to pay only the interest as your monthly EMI. Then, you can repay the principal at the end of the tenor, which is another financial benefit. In effect, as compared to a term loan, choosing this option will help you reduce up to 45%* on EMIs.

Pay an affordable rate of interest
Unlike other loans, you can enjoy a low rate of interest on CA loans, which makes these financing options even more affordable. Also, you have the option of a flexible tenor. When you choose a longer tenor, your EMIs are spread out over a longer period of time, making each EMI more reasonable.

Save tax on interest payments
When you take a business loan, the interest you have paid towards it is considered an expense. This reduces your tax liability, especially since there is no limit on the maximum amount you can exempt. On the other hand, if you buy any asset from your personal loan, such as jewellery, you can enjoy tax exemption on the interest payment. But, the deduction isn’t provided for in the same year that you pay the interest. You benefit when you sell the asset. Let’s assume that you have purchased a computer. The difference between the purchase price of the computer (cost of acquisition) and its selling price is the capital gain. The interest component of your loan increases the cost of acquisition, which in turn reduces your capital gains. Since these gains are subject to taxation, a lower capital gain corresponds to lower tax liability.

Loan against property for chartered accountants

You can use a loan against property to secure the necessary funds to build or renovate your office. Secured loans help you make big purchases without crippling your personal or business finances.

Take a look at how they help:

Pay affordable EMIs
These loans come with relatively lower interest rates. So, if buying property is on the agenda, these loans remain your best option for finance. With a tenor that stretches up to 144 months, your EMIs become even more affordable and manageable.

Reduce your EMIs with Flexi loans: With a loan against property, you can enjoy all the benefits of a Flexi loan. You have ample options to make the loan more affordable from EMIs that are 45% more affordable to the choice to pay only interest in the form of monthly payments.

Enjoy value-added services
These loans give you access to customised insurance schemes and property search services. For example, if you opt for the latter, you don’t have to hire a real estate broker. It is a service that is in-built into your loan, thereby reducing your expenditure.

These loans offer great tax benefits. Here’s an overview of what you can expect:

Tax deductions offered under section 24
Under this section, the interest paid is tax-deductible. This holds true as long as you’re taking a home loan to buy, repair or reconstruct a residential property. If a self-occupied property is completed within five years, the deduction limit is Rs. 2 lakh. But, after five years, if the construction is incomplete, the deduction limit reduces to Rs. 30,000. On the other hand, if the property isn’t self-occupied, there is no limit on the deduction and no time frame governing this.

Tax deductions offered under section 80 C
This section allows for a deduction of up to Rs. 1.5 lakh on the principal paid towards a home loan once the construction is complete. The only condition is that the home loan must help the purchase or construction of a new property.

Tax deductions offered under section 80EE
This benefit is applicable only for first-time homeowners. So, if you’re taking a loan against property by pledging a house you purchased 18 years ago, you won’t be able to claim a tax break under this section. As long as your property’s value is less than Rs. 50 lakh, and your loan are lower than Rs. 35 lakh, you can claim a tax deduction on your interest payment of up to Rs. 50,000 each year. This benefit is available to you until you pay off your loan.

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*Terms and conditions apply