A lot of people apply for personal loan to mostly meet their short-term goals. The ease and convenience of acquiring personal loans have enabled millions of individuals across the country to realize their dreams, whether traveling abroad or something else. While the advantage of getting funds, almost instantaneously, is one of the primary reasons why several people take this option, taking a personal loan also comes with tax benefits.
Whether you are availing a loan to fund your vacation goals or to put into something else, it is helpful to know what tax benefits will come with it. Do remember that the tax benefits on personal loan also depends on why you are taking the loan. Mentioned below the tax benefits on a personal loan you should be aware of:
Using a personal loan to fund your business makes the interest eligible for a tax deduction. In the larger scheme of things, this tax deduction reduces the overall taxable profit of your business too.
If you find yourself short of funds when buying or constructing your own property, then a personal loan can help solve your immediate problem. Plus, the proceeds are tax-deductible to up to Rs 2,00,000 under Section 24 of the Income Tax Act if the property is self-occupied.
Additional Read:- Tips to Save Money Through Personal Loans
For home improvement
Whether you want to up the quotient of the interiors of your new home or beautify your existing one, a personal loan for home improvement comes with a tax deduction option of up to Rs 1,50,000 under Section 80C of the Income Tax Act.
For purchasing assets
Having an assortment of assets is financially wise, especially to have something you can fall back on in case of unforeseen events and emergencies. Taking a personal loan for buying assets is not unheard of; people often apply for a personal loan to buy even jewelry or shares. If you are planning to take a personal loan with this kind of intent, then the personal loan interest rate paid is part of the cost of asset acquisition.
Since a personal loan is not part of your income, it is not treated as taxable. Also, do note that you must have a few documents with you to claim tax on your personal loan. Documents such as a loan sanction letter, auditor’s report, bank certificate, and an expense report must be kept handy at the time of claiming benefits.
Additional Read:- Mistakes to Avoid When Availing a Personal Loan
Some people hesitate to take a personal loan due to the financial implications, but a personal loan from Tata Capital can help you fund your dreams. If you are prudent about your expenses and are careful with your finances, you will be able to do more with the money acquired through a personal loan.