A personal loan is also referred to as unsecured loans as they do not require any collateral and easily available to all for financial emergencies. While a personal loan can be your saviour during a cash crunch, let us learn its benefits on income tax. 

Is a Personal Loan Taxable?

As a personal loan is not considered income, it is not taxable. However, it is always advisable to take a personal loan from a reputed lender to avoid any tax deduction on your loan amount. You can apply for loan here: https://www.fullertonindia.com/personal-loan.aspx

Can one avail tax benefit on personal loan?

While many of you may deny, but apart from many other benefits, personal loan online apply also helps in reducing your tax liability. This can happen if you put the loan amount to a specific end-use. As per the Income Tac Act,1961 tax benefit can be availed on personal loan if it is put to the following use: 

1. Business Expansion

If the loan amount is being used to meet the expenses related to business expansion, which in turn will help in increasing the revenue of the business. Then you can claim a tax deduction for the interest you are paying on the personal loan.

Must Read: 5 Reasons Why Borrowers Choose Fullerton India NBFC for Personal Loans

2. House Renovation

If the loan amount is used for home renovation or improvement, the interest paid up to Rs 30,000 can be claimed as a deduction. If the renovation is for a residential house then a deduction of up to Rs 2 Lakh is allowed for interest paid. You can use the Personal loan EMI calculator to learn your interest paid. 

3. Purchase of other assets

If the money borrowed is used to purchase an asset like non-residential house property, gold jewellery, or shares, you can benefit from the exempted tax on the personal loan. 

 So, while the personal loan is unsecured and is not taxable, if used judiciously it can offer great tax benefits.

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