Tax Benefits on Personal Loan And How To Claim It

Tax Benefits on Personal Loan And How To Claim It

Personal Loan Tax Benefit - As per the Income Tax Act, 1961, you can claim tax deductions and exemptions if you put the loan amount to particular uses.
Loan Types

Loan Types

FAQs

FAQs

Video

Video

Rs. 40000 - Rs. 55 lakh

You may be eligible for a pre-approved offer

Check now

Enter mobile and OTP | Check offer | Apply online

Can you get the tax benefit on a personal loan?

While it is rare to enjoy tax benefits through a personal loan, it isn’t impossible. Here is all you need to know.


Tax benefits on personal loan

It’s important to take a personal loan from a credible source. If the source of funds doesn’t seem legitimate, tax authorities may view the loan as your income and tax you on it. For this reason alone, borrow from a reputed lender such as Bajaj Finance. Get ample funds and benefit from simple personal loan eligibility criteria.

Show More
Show Less

Tax benefits

As per India’s Income Tax Act, 1961, personal loans are eligible for tax exemptions or deductions under section 80C depending on how you use the funds. Here are some scenarios that help you lower your tax outgo.

  • For purchase or construction of residential property: As per Section 24 (b) of the IT Act, you enjoy tax deductions if you use a personal loan to buy or construct a residential property. While there is no limit for a home that is put on rent, for a self-occupied property, the deduction limit is Rs. 2 lakh.
  • For business expansion: You can use a personal loan to finance business expansion to increase revenue. Here, you can claim the interest you pay towards the loan as a tax-deductible expense.
  • Buying other assets: Purchasing certain assets such as jewellery through a personal loan offers tax benefits. The interest that you pay on this loan is considered the cost of asset acquisition. You can claim tax benefits as and when you sell the asset. Here, the cost of acquisition reduces capital gains.
  • Home Improvement: Utilise energy-efficient home improvement credits. Leverage mortgage interest deductions for qualified home improvements. Take advantage of property tax deductions related to home upgrades.
  • Education Expenses: Claim tax credits for qualified education expenses. You can explore education-related deductions for tuition and fees. Consider education savings plans for tax advantages.

If you’re considering borrowing a personal loan, check personal loan interest rates and calculate EMIs using our Bajaj Finserv personal loan EMI calculator before applying.


 

Show More
Show Less

Show More

Show More

Key offerings: 3 loan types

  • Flexi Hybrid Term Loan
  • Flexi Term Loan
  • Term Loan

  • Withdraw and prepay – no extra charges
    You can withdraw from your limit and prepay as many times as you want, without extra charges.

  • Instalment pattern
    You can pay interest-only EMIs for up to 24 months, after which, the EMI will consist of both, the principal and the interest. EMI is applicable only on the withdrawn amount.

  • Flexi facility charges
    Flexi facility charges applicable based on your loan amount.

  • Withdraw and prepay – no extra charges
    You can withdraw from your limit and prepay as many times as you want, without extra charges.

  • Instalment pattern
    Fixed EMIs that cover both the principal and interest on the loan amount you withdraw.

  • Flexi facility charges
    Flexi facility charges applicable based on your loan amount.

  • Amount disbursed in one go
    The entire loan amount is disbursed at the start.

  • Instalment pattern
    Fixed EMIs that cover both the principal and interest.

  • Flexi facility charges
    No Flexi facility charges.

Personal loan interest rate and applicable charges

Type of fee

Applicable charges

Rate of interest per annum

10% to 31% p.a. 

Processing fees 

Up to 3.93% of the loan amount (inclusive of applicable taxes). 

Flexi Facility Charge

 

 Term Loan – Not applicable

Flexi Loans – Up to Rs 1,999 to Rs 12,999/- (Inclusive of applicable taxes)

Will be deducted upfront from loan amount.

Bounce charges 

Rs. 700 to Rs. 1,200/- per bounce

“Bounce charges” shall mean charges for (i) Dishonor of any payment instrument; or (ii) Non-payment of instalment (s) on their respective due dates due to dishonor of payment mandate or non-registration of the payment mandate or any other reason.

Part-prepayment charges

Full Pre-payment:

• Term Loan: Up to 4.72% (Inclusive of applicable taxes) on the outstanding loan amount as on the date of full pre-payment.
• Flexi Term (Dropline) Loan: Up to 4.72% (Inclusive of applicable taxes) of the Dropline limit as per the repayment schedule as on the date of full prepayment.
• Flexi Hybrid Term Loan: Up to 4.72% (Inclusive of applicable taxes) of the Dropline limit as per the repayment schedule as on the date of full prepayment.

Part-prepayment

• Up to 4.72% (Inclusive of applicable taxes) of the principal amount of Loan prepaid on the date of such part Pre-Payment.

• Not Applicable for Flexi Term (Dropline) Loan and Flexi Hybrid Term Loan.

Penal charge

Delay in payment of instalment(s) shall attract Penal Charge at the rate of up to 36% per annum per instalment from the respective due date until the date of receipt of the full instalment(s) amount.

Stamp duty (as per respective state) 

Payable as per state laws and deducted upfront from loan amount.

Annual maintenance charges 

Term Loan: Not applicable

Flexi Term (Dropline) Loan:

Up to 0.295% (Inclusive of applicable taxes) of the Dropline limit (as per the repayment schedule) on the date of levy of such charges.

Flexi Hybrid Term Loan:

Up to 0.295% (Inclusive of applicable taxes) of the Dropline limit during Initial Tenure. Up to 0.295% (Inclusive of applicable taxes) of Dropline limit during Subsequent Tenure

Not your nearest branch?

Banner_NEW_Storelocator_XAOP_App_10112025.png

Related articles

Article 1

Flat vs Reducing Interest Rate

Aug 18, 2025

Read More

 Article 2

Get a Personal Loan without a salary slip

Nov 04, 2025

Read More

 Article 3

Top ten cheapest countries to travel from India

Aug 21, 2025

Read More

You are here

Related Links

Disclaimer

Bajaj Finance Limited has the sole and absolute discretion, without assigning any reason to accept or reject any application. Terms and conditions apply*.