How to Claim Tax Benefits on Personal Loans

Personal loans are a popular financial tool that can help individuals meet various needs, from consolidating debt to funding a major purchase or handling unexpected expenses. Unlike specific loans tied to assets like homes or cars, personal loans are unsecured, which means they don’t require collateral. This makes them accessible to a wide range of borrowers, though interest rates can vary depending on the lender’s credit policy and other factors.

Personal loans offer flexibility, with fixed repayment terms and monthly instalments making it convenient to clear the debt over a predefined period. It’s a common notion that tax benefits can’t be claimed on personal loans, unlike home loans or business loans. However, borrowers can claim income tax benefits on personal loans availed for specific purposes.



To claim deductions on personal loans, you need to plan it well and provide all documents to support your claim. Let’s take a look at how to claim tax benefits on personal loans and why documentation for this purpose is crucial. Tax Benefits On Personal Loans Personal loans can offer tax benefits, but these apply in specific cases.

Here are a few scenarios where you can claim income tax deductions on personal loans: Personal loans taken for non-qualifying purposes, such as weddings or holidays, do not qualify for tax benefits. You can explore multiple personal loan offers on the Moneycontrol app and website. The loans start at an interest rate as low as 12% per annum and you can borrow up to ₹15 Lakhs from eight lenders in a completely paperless process.

How To Properly Document Personal Loans It’s crucial to produce documentary proof to avail tax benefits on personal loans used for these specified purposes. To claim tax benefits on personal loans, the taxpayers will be asked to submit valid documents supporting the claims during the filing of the Income Tax Return (ITR). Here are the documents you need to keep handy for claiming tax benefits and a hassle-free ITR filing: Documents For Residential Property Construction or Renovation: For Asset Acquisition For Other Eligible Expenses: Get Instant Loan Up To Rs.

15L Tips For Effective Record-Keeping: ALSO READ: Is personal loan expensive? Here’s what you must know about personal loan cost If you are looking forward to borrowing money for the above-mentioned purposes to maximise tax benefits, you can do so through Moneycontrol app and website, which offers loans in partnership with eight lenders. The loans start at an interest rate of 12% per annum and you can borrow up to ₹15 Lakhs . The entire process is 100% digital and the amount can be credited to your account within minutes.

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