Reclaim your tax using your personal loan. Sounds crazy but it is true. You can apply for a personal loan and can claim Tax Reimbusement in your name. Some people already know this and have availed the benefits, whereas some are still shocked with the enlightenment.
Having said that, it’s not necessary that every personal loan applicant can reclaim tax benefits. There are some conditions that a personal loan customer has to fulfil in order to be eligible for tax reimbursement.
Used the borrowed capital from a personal loan to renovate their existing property, or used the amount to pay the downpayment, or for unavoidable construction work in their home.
Used the borrowed capital to finance their own higher-education, or used the same towards the payment of higher-education of their child. In short, a personal loan used as education loan are eligible for tax reimbursements.
Now, if you are applying for a fresh personal loan, or already have one- you must use the borrowed capital for either home renovation and maintenance, or for higher-education to qualify for tax reclaim.
How to apply for tax reimbursement:
Or, you can apply for tax-reimbursement yourself. You will need an application form to apply for tax reimbursement under different sections. Usually, form 16A works in both cases, however, the section will be different. For personal loan used towards education, the applicant has to apply for tax-reclaim under section 80D. Whereas, for a personal loan used towards home renovation, the applicant has to apply for tax-reclaim under section 24B.
Bottom line: For more information, you can always consult your lender regarding this. They will be able to provide more accurate information about the documentation, the right procedure etc.