If you’ve taken a personal loan and are wondering can I claim personal loan interest on my taxes deduction, the short answer is No. Generally, unless the loan is used for specific eligible purposes under the Income‑tax Act, 1961, interest on a personal loan is not tax-deductible. You may be eligible for a deduction on personal loan interest if the funds are utilised for certain purposes recognised by the tax law:
If the personal loan is used to buy or construct a residential property, or for major home repairs, you can claim a deduction under Section 24(b). For a self-occupied property, the limit is Rs 2 lakh per annum on interest.
If you’ve used the personal loan to pursue higher studies (for you, spouse, or children), the interest may be claimed under Section 80E (originally available for education loans). But this is rare for unsecured personal loans and requires that important criteria be met.
If the personal loan is used wholly and exclusively for business expansion or professional activity, the interest can be claimed as a business expense (typically under Section 37(1)).
If the personal loan is used for purely personal purposes, such as travel, wedding, buying consumer goods, or lifestyle expenses, the interest is not deductible.
Simply taking a personal loan does not automatically give a deduction. The use of funds matters, and you must maintain proper documentation of how funds were used.
Clearly establish the purpose of the loan and maintain proof (loan agreement, fund utilisation statements, invoices). Ensure the property or educational course meets the relevant section criteria if claiming under Section 24 or Section 80E.
Also, be aware that for home renovation, the deduction is capped at Rs 2 lakh per year for self-occupied properties. If you are on the “new tax regime” (where many deductions are restricted), check whether these deductions apply.
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Can I Claim Personal Loan Interest on My Taxes?
ravi
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2025-11-24T19:36:15+00:00 2025-11-24T19:36:17+00:00Comment
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