Personal Loans are unsecured loans, ideal for situations when you need funds but don’t have a property or security to pledge for the amount. Generally, Personal Loan is not taxable and you can claim the income tax benefits on Personal Loan, if you have used it to acquire, construct, repair, or reconstruct a property. As you are not providing an asset as security, Personal Loan interest rates might be higher than the interest charged for secured loans. However, it is easy to apply and get approved for Personal Loans if you are salaried. Self-employed individuals can also avail of Personal Loans if they can provide proof of income from their business. If you’d need funds for a trip or business expansion, take a look at the Personal Loan with online account access being offered by Bajaj Finserv.
Loans are not considered a part of your income, so the Personal Loan loan will not be considered as a taxable fund when you are filing IT returns. This means that you won’t be paying taxes on Personal Loans. However, the loan has to be from a valid source like a bank or other financial institution as loans from unknown sources may be considered as income while computing your taxes.
You can actually claim tax benefits on Personal Loans in some cases. Regardless of the loan’s source, if you can prove that you have used the loan for a valid expense, you can actually use your Personal Loan for tax saving and claim tax deductions on the interest paid on the loan.
Financiers like Bajaj Finserv offer Personal Loans that are quick and easy to apply for and have an instant approval policy.
Your House and Your Personal Loan
Employing the Personal Loan for your house can do wonders if you are aiming to avail of tax deductions. Section 24(b) of the Income Tax Act provides relief to home buyers, giving them tax deductions on loans taken to buy a residential property or to renovate it. If you use the Personal Loan towards the down payment for the purchase of a house, then you can claim tax exemption. If you use the loan amount to pay for home repairs, renovation, or for reconstruction, all these are also considered valid expenses for tax deduction.
You cannot claim deduction on the principal amount of the loan, but the interest paid on the loan can be utilized for tax deduction. If you are living in the house on which you spend the money taken as loan, you can claim tax deduction for interest amount up to Rs.1,50,000. For a house that has been rented, there is no limit on the interest amount that can be claimed.
If you have purchased a house that is under construction, you cannot claim the deduction until after the construction is completed. Also, the house should be ready to occupy within three years of taking the loan.
Preserve all the documents needed to provide proof that you have used the loan amount on a house. If you have used the amount to carry out repairs or renovations, preserve the bills for materials and labour. These are needed to claim your tax deductions.
Personal Loans are great options to handle urgent requirements for funds. They can also be used as tax saving instruments, if used properly.
Understand how you can get a Personal Loan for Home Improvement, while claiming tax benefits. Bajaj Finserv offers a great Personal Loan with a great set of benefits, such as:
Instant approval: With Bajaj Finserv, you can get loan approval in as little as five minutes and money in your bank as early as within 72 hours.
Loans of up to Rs.25 lakh: Get a loan of up to Rs.72 lakh and repay it at your convenience by opting for tenures ranging from 24 months to 60 months.
If you earn a monthly salary of Rs.30,000 or more and meet our eligibility criteria, click here to apply for a personal loan now.