Claiming tax benefits on personal loans isn’t as straightforward as it is for investments or home loans. However, depending on your specific circumstances, you may be eligible for some benefits. Please find the below points:
Interest Payments: You can claim tax benefits on the interest payment done for a personal loan under Section 24(b) of the Income Tax Act.For instance, if you use the loan amount for home renovation, you can deduct up to ₹30,000 per year on the interest paid. If you use the entire loan amount for higher studies in abroad, then you claim entire interest amount.
Business Purposes: If you use the personal loan funds for business purposes, you can claim deductions on the interest payments.For example, buying specialized equipment or stocking inventory qualifies for tax redemption.
For buying property and renovation: Personal loans can also be used for property-related expenses.If home loan conditions don’t suit you, consider a personal loan for house renovation or additions.
Section 24(b) allows redemption on the interest paid for such purposes.
