Claim Income Tax Benefit on Interest on Personal Loan – As per the Income tax section 24 any individual may get the Tax benefit on personal loan interest provided certain condition to be met.
In general the personal loan are considered as the consumption loan hence no benefit or deduction provided but while considering the tax exemption , it is the end use of the funds matter and not its source. This is the basis on which one can Claim Income Tax Benefit on Interest on Personal Loan.
How To Claim Tax Benefit on Personal Loan ?
Now the magical question, how to get the benefit on personal loan repayment ? Income Tax Section 24 (b) define the income from house property , in this section the various computation are provided for the interest paid on borrowed capital for construction or repair or renovation etc of house. But this particular section doesn’t define any thing about the type of loan for sourcing the capital i.e. whether housing loan or personal loan or any other loan.
Read Also : How to Get a Personal Loan from bank easily?
One need to follow the below mention instruction in order to get the Income Tax benefit on Personal Loan
1. Principal portion of the personal loan will be claimed for deduction only when loan was taken from a bank or other prescribed lender.
2. Interest of the personal loan paid in the financial year can be claimed for deduction if loan taken to acquire, renew, repair or reconstruct a house property .
3. For self-occupied properties interest deduction up to the limit of Rs 2 lacs can be claimed
4. There is no ceiling for second house
5. This is to remember that the Interest claim deduction can’t be considered if the property is in construction stage.