Steps to get the Tax Benefits on Personal Loan – Yes, it’s correct. You can claim an Income Tax Benefit on interest paid on personal loan, used for home renovation under Section 24. Check out the details, rules and documents require to claim.
As per ITR rules : It is not necessary that the money should have been borrowed as home loan to claim the Income tax benefit under sec 24. It may be claimed on any monies borrow and interest paid on money borrowed for the purpose of purchase, repairs, renovation etc. of house.
How to Claim Tax Benefits on Personal Loan ?
Interest paid to your friends and relatives in respect of money borrowed for the purposes specified above can also be claimed under section 24(b).
It is only needed to provide the actual usage of the personal loan for the purpose of renovating your property to avail the deduction. This could easily be established between credit of the personal loan in your bank account and its corresponding use for making payments for renovation etc. You may submit the vouchers and expenses paid for supporting your claim.
Though you are not allowed to attach any document with your ITR, you still need to preserve the documents in case you case is selected for detailed scrutiny. You need to preserve the copy of the bank statement for the relevant period as well as the statement of personal loan where the interest paid is reflecting. You also need to preserve the invoices for renovation done.
If you have not claimed the deduction on interest paid for personal loan during the last year in your income tax return, you can still do so by revising your ITR.