Financing your varied personal and professional requirements become easy if you avail a personal loan. It is an unsecured credit that you can avail without any collateral. Hence, the time taken for approval and disbursal of this credit is minimal.
With Bajaj Finserv, you receive approval of this loan within five minutes of application and disbursal within the next 24 hours.
While the loan comes with several benefits you can enjoy, personal loan tax benefits are rare yet possible.
Usually, personal loans do not come under the purview of taxation. It is because the loan is not considered as income during income tax calculation.
You need to keep in mind, however, that you should avail this loan from a reputed lender or it may be considered as your income if the source is not recognisable. You can avail such credit from Bajaj Finserv with their easy-to-meet personal loan eligibility criteria.
Although personal loans are not taxable, you may avail personal loan tax exemptions if you put it to specific end-use. It is because, per the Income Tax Act, 1961, you can claim tax deductions and exemptions if you put the loan amount to particular uses.
You can claim tax deductions for interest paid on personal loan repayments if the amount has been utilised to meet expenses related to business expansion. The investment should, however, be made to increase a business’s revenue.
Section 24(b) of the Income Tax Act, 1961, allows for a tax rebate on a personal loan if the amount is used for home renovation or improvement. In this case, interest paid on a personal loan repayment up to Rs.30,000 can be claimed as deduction from the total taxable income. If you use the amount for the purchase of a residential house, a deduction of up to Rs.2 lakh is allowed for the interest paid.
So, you can achieve tax savings on a personal loan by utilising the amount for house renovation.
If you invest the amount for the purchase of any other asset like non-residential house property, gold and jewellery, and shares, you can benefit from the exempted tax on the personal loan. Interest paid on the same is considered the cost of asset acquisition.
It reduces the total capital gains and provides personal loan tax benefits.