Interest on personal loan can be claimed as income tax deduction in some instances. Details here

How can I avail tax advantages for personal loan taken? Can I declare any profit for compensation of the personal loan? 

Answer: No tax advantages can be found for compensation of a personal loans. However, curiosity paid on s personal loans can be claimed as deduction relying on the last word use of the quantity borrowed. So in case the quantity of personal loan has been used for buy, development or repairs renovation of your home property, you can declare the curiosity beneath part 24(b) inside prescribed limits, supplied you’ll be able to conclusively show that the personal loan was in truth used for the said goal. The combination of curiosity on all monies borrowed for the above goal can be claimed as much as two lakhs in a yr if the home property is self-occupied. In case the personal loan has been used for a let loose property, complete curiosity paid can be claimed towards the taxable rental income topic to a restriction of set off of losses beneath the home property head, for all of the properties taken collectively, towards different income through the yr being restricted to 2 lakhs. Any loss remaining unabsorbed past two lakhs is allowed to be carried ahead for set off towards the home property income in eight subsequent years. 

In case you’re carrying on any enterprise or occupation and the cash borrowed on personal loan has been used for your online business or occupation, you can declare the curiosity paid on such personal loan as enterprise expenditure beneath Section 37(1). The identical can be claimed even when you’ve got taken the personal loan for the aim of shopping for any mounted asset like car and many others. Please notice that no tax advantages can be found for curiosity paid on personal loan used for any personal use like marriage, holidays and many others.

Balwant Jain is a tax and funding professional and can be reached on jainbalwant@gmail.com and @jainbalwant on Twitter

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