A personal loan is a lot that provides you financial aid. As life is very unpredictable so you can need money at any time. In this case, going to the bank for a personal loan is quite obvious. Besides that, a loan is easily approved and quickly disbursed. Bank asks you some limited questions about your salary or income and the credit history and if you are eligible then you will get a personal loan easily. You are free to use this amount of loan for your personal needs. The personal loan also comes with many tax benefits.
A loan does not allow any kind of tax deduction. However, if you get a loan for any specific purpose like a home loan or business loan you will have to pay the tax. So while providing a personal loan purpose for the loan is also considered. If you are getting a personal loan for a purpose for which the tax deduction is not allowed then you won’t have to pay the tax for the personal loan.
On the other hand, if you get a loan for the following purposes you will have a reduction in the tax.
- For Business Purposes
If you are getting a personal loan for business purposes then the interest that you are paying to the cause decrease in the net profit. Therefore it will reduce your tax liabilities.
- To buy a Real Estate Property
If you are getting this loan to buy any real estate property the same will happen as in the above case under section 24. There can be a maximum deduction of Rs. 200000 is allowed for the self-occupied house.
- To Purchase any Asset
If you make the use of a personal loan to buy shares, jewelry, or non-residential house the amount that you pay as interest will be deducted from the tax. One more thing is to note is that deduction is allowed only on the personal loan interest rates, not on the principal amount.
What is section 24?
As we have discussed section 24 earlier, we need to know that what a section 24 is? This section of income tax says that amount of interest paid on a home loan or any kind of business loan would be deducted from the tax. But the condition is that the loan must be taken for the purpose of buying property, renovating the home, or for business purposes.
Apply online to avail the benefits of personal loan, various banks provide benefits of personal loans such as Axis Bank, Bajaj finance bank, Bandhan Bank
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