Want to apply for a personal loan? There are several benefits of taking a personal loan and it’s not just about the ease of repayment or hassle free application and approval procedures. There are quite a few tax benefits on personal loans that you should be aware of. Section 80C tax deductions are uppermost in people’s minds but there are some other deductions which can often come in handy for you. Here’s a look at the same:
Tax Exemptions on Children’s Education
If you have worked out your personal loan eligibility for arranging for funding to support your child’s tuition fees, you will get benefits later on. There are tax deductions on the tuition fees made to your child’s college, school or university throughout the year. You can get this deduction without having to lock in your funds towards Section 80C compliant investments.
Tax Deductions for Disability
If you are taking care of a disabled dependent and the medical treatment expenditure is borne by you, tax relief can go up to Rs.75, 000 while this can go up to Rs.1.25 lakhs in case of disability over 80%. You can always check out the current personal loan interest rates for medical treatment. Taking a personal loan will help you get this benefit later on.
Tax Relief for Particular Illnesses
Again, if you have taken a personal loan for medical treatments of a family member with particular illnesses, there is some tax relief offered by the Government. Treatment for illnesses like AIDS, kidney failure or cancer is eligible for tax deduction from the income up to Rs.40, 000 under the Section 80DDB. This deduction goes up to Rs.60, 000 in case of senior citizens and Rs.80, 000 for very senior citizens. Tax payers can claim these deductions if they are looking after dependants suffering from these illnesses and have already availed of personal loans to meet this expenditure.
Deductions on Personal Loan Interest in Case of Home Purchases
There is often a common misconception that only if a tax payer takes a home loan from a financial institution will he/she be eligible for deductions on interest paid under Section 24. However, interest paid on personal loans from relatives or friends can be eligible for similar tax benefits provided lenders give a certificate that the tax payer has paid the particular amount of interest.
Renovating your House is Eligible for Tax Deductions
If you are taking a personal loan for renovating or refurbishing your home, you can get tax benefits as well. Interest paid on loans for financing the reconstruction or revamp of your property can be claimed as a tax deduction under the Section 24B. This deduction, however, is only limited to INR 30, 000.
How to Get Tax benefits from your personal loan
You can now use an personal loan EMI calculator to work out your approximate personal loan EMIs and apply for a personal loan right away if you have any of the above requirements.