{"id":13720,"date":"2023-08-28T12:28:43","date_gmt":"2023-08-28T12:28:43","guid":{"rendered":"https:\/\/www.tatacapital.com\/blog\/?p=13720"},"modified":"2026-04-02T18:58:37","modified_gmt":"2026-04-02T13:28:37","slug":"tax-benefit-on-personal-loan","status":"publish","type":"post","link":"https:\/\/www.tatacapital.com\/blog\/personal-use-loan\/tax-benefit-on-personal-loan\/","title":{"rendered":"Can We Get Tax Benefit on Personal Loan?"},"content":{"rendered":"\n

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The income tax filing session is in full swing. And, it is natural for people to want to avail some form of tax benefit. In this article, we will be talking about whether there is any tax benefit on personal loan<\/strong>.<\/p>\n\n\n\n

Are Personal Loans Taxable?<\/strong><\/h2>\n\n\n\n

Unlike salary, business profit, or investment earnings, where you get to keep the money, personal borrowings or loans have to be repaid, and hence cannot be a part of your income.<\/p>\n\n\n\n

As a result, there is no income tax on personal finance. However, only personal credit or loans borrowed from any recognized NBFC or Bank is not taxable. There may be some tax implications if you receive personal loan<\/a> or credit from family members or friends.<\/p>\n\n\n\n

Personal Loan Tax Exemption 2026<\/strong><\/h2>\n\n\n\n

There are no tax exemptions on personal finance. Since personal credit falls under unsecured loans without any collateral, the Income Tax Act (ITA) does not allow for any tax benefits on this type of borrowing. However, you can avail tax deductions on loans taken for specific purposes such as a Home Loan<\/a>, Business Loan<\/a>, Vehicle Loan<\/a>, etc.<\/p>\n\n\n\n

Different tax deductions and exemptions available on Personal Loans<\/strong><\/h2>\n\n\n\n

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Exemption Applicable on<\/strong><\/td>Borrower Implications<\/strong><\/td>Exemption or Deduction Limit<\/strong><\/td><\/tr>
If the personal loan is used for home improvement<\/td>Claim tax deduction on the interest paid under Section 80 C of the Income Tax Act 1961<\/td>Up to Rs 1.5 Lakh<\/td><\/tr>
If the personal loan is used for Purchasing or Constructing Residential Property<\/td>Claim tax deduction on the interest paid under Section 24 of the Income Tax Act 1961<\/td>Up to Rs 2 Lakh<\/td><\/tr>
If the personal loan is used for business purposes<\/td>Claim tax deduction on the interest paid under Section 36(1)(iii) of the Income Tax Act 1961<\/td>No limit<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

Why Should You Consider a Personal Loan Even Without Tax Benefits?<\/strong><\/h2>\n\n\n\n

While tax exemption is not one of them, availing personal finance has several advantages, such as:<\/p>\n\n\n\n

Unsecured loan:<\/strong><\/h3>\n\n\n\n

Personal credit or loans require no collateral. This means you don\u2019t have to mortgage or hypothecate any assets.<\/p>\n\n\n\n

Minimal documentation:<\/strong><\/h3>\n\n\n\n

Processing personal finance requires minimal paperwork for processing, mainly because it is an unsecured loan. Applicants only need to provide their KYC documents and bank account statements. This also results in faster loan processing.<\/p>\n\n\n\n

Financing up to 25 lakhs:<\/strong><\/h3>\n\n\n\n

Availing personal finance is a great way to raise substantial amounts in case of an emergency. If you have a good credit score and a steady income source, you can easily avail of personal finance of up to Rs. 25 lakhs.<\/p>\n\n\n\n

Relaxed personal loan eligibility:<\/strong><\/h3>\n\n\n\n

Personal finance comes with relatively relaxed eligibility criteria, catering to salaried as well as self-employed individuals. While the specific criteria are different for different institutions, if you are an Indian citizen between the ages of 22 to 58 with a minimum monthly income of Rs. 15,000, you can apply for personal finance.<\/p>\n\n\n\n

Tax Benefits Available for Personal Loans<\/strong><\/h2>\n\n\n\n

You can avail of a personal loan deduction in income tax<\/strong> only for specific purposes:<\/p>\n\n\n\n