According to a report by the Reserve Bank of India, personal loans account for 28% of total bank credit in India. And why not? Personal loans are easy to get and offer flexible EMI and tenure options. Additionally, personal loans are unsecured. It means that the applicant doesn’t have to show collateral to get the loan. A personal loan is offered based on the credit score, previous payment history, and other specific factors considered by the lender. However, personal loans attract comparatively higher interest rates than secured loans.
Be it for any purpose, your wedding, or your home’s renovation, a personal loan can fulfill your emergency funding needs easily. However, getting tax benefit on a personal loan can be tricky. Some people can also find getting a personal loan tricky due to various factors. Airtel Flexi Credit gives instant approvals and require minimum documentation. You can get a loan ranging from Rs 10,000 to Rs. 9,00,000 with flexible loan tenure and EMI options.
We will discuss personal loan tax exemption and more on personal loan application via Airtel Flexi Credit further in the article. Let’s get started!
Can you get tax benefits on a personal loan?
An individual is usually taxed on his/her income. A personal loan is not considered a part of an individual’s income. Therefore, it is not taxable and not eligible for a tax benefit. You don’t need to pay any income tax for a personal loan.
However, there are several indirect ways to get tax benefits for Personal loan.
How to get tax benefits on a personal loan?
There is no different provision for a personal loan under the Indian Income Tax Act. However, there is a provision for tax benefits for home or education loans. It doesn’t mean one can’t get any form of tax benefit with a personal loan. In such cases, the reason for which the personal loan was taken is considered. Those can help you get tax deductions for a personal loan.
Let’s discuss these in detail now:
If the borrower invests the loan amount in a business, the interest amount can be claimed as an expense. If the interest amount is the expense, it will be deducted from the borrower’s taxable income. Since the personal loan amount helped the borrower reduce his/her taxable income, any personal loan amount used by individuals for business can help you get the tax benefit.
Investment in assets
Another way to get a tax benefit on a personal loan is to use the loan amount to invest in assets like gold, shares, the stock market, non-residential properties, etc. The interest paid can be claimed in the year the assets are sold.
Investment for the purchase and construction of a property
You can also get tax benefit on a personal loan if the money is used to construct or purchase a residential property. The interest paid can be claimed under Section 24 of the Income Tax Act, 1961. You can get a deduction of up to Rs. 2,00,000 if the borrower has occupied the house. If the house is rented out, there is no ceiling on the maximum deduction amount.
Note: The borrower should be the owner of the house to avail the tax benefit.
Keep these pointers in mind to get a tax benefit on a personal loan.
Personal Loans from Airtel Flexi Credit
Personal loans can get you tax benefits with the above-mentioned pointers. You can apply for a personal loan from Airtel Flexi credit, via the Airtel Thanks app or from Airtel’s official website. Follow the below steps to apply for a personal loan of up to Rs. 8,00,000:
- Open the Airtel Thanks app and head to the shop section in the app.
- Tap on Financial Services > Get a personal loan.
- Enter your PAN details and answer simple questions to check your eligibility.
- See the best loan offers available for you immediately.
- Select an offer and apply for the loan.
- Submit your documents online to complete the KYC.
- After the approval, the amount will be credited to your account within 24 hours.
You can check your EMI amount as per the loan tenure by using the personal loan EMI calculator available on the app. This will help you plan your repayment better. If you are using the loan amount for business purposes or for the purchase of the said assets, keep the relevant documents ready to claim the tax benefit while filing your ITR.
Consult your accountant or a professional to understand how you can save more on tax using a personal loan. We wish you the best in your financial journey. Keep coming back for more finance-related content!