One of the commonest loans that Indian borrowers are nowadays availing is none other than the personal loans. Availing a personal loan online will helps a borrower cover many expenses. It could be medical emergencies, wedding, and vacations and beyond. In addition, you can claim tax deductions on personal loan if you use the loan amount for the following purposes.
Tax deductions on personal loan:-
1) When you use the loan amount for buying/building property
The section 80C of the Indian Income tax law allows people to claim a deduction up to Rs 1.5 lakhs a year as a part of their future investment. You can invest in different savings schemes accepted under section 80C or buy your first house. In that case, the principal amount that you pay every year against your loan, can be claimed as a deduction subject to a maximum of Rs 1.5 lakhs per year. That said, this section won't work the same way if you're buying your second.
2) When you use the loan amount for renovating your property
Again, the Indian income tax laws, understanding the expensive nature of home renovation activity, allow people to claim tax deductions on amount paid against loan taken for home renovation.
3) When you use the amount for business purposes
When you take a loan and use it for your business growth and expansion purpose, the interest and the principal is added to the ‘expense list’ of your business. Hence, you can claim tax benefits on loans taken for business purposes.