I came across this query several times, which is personal loan tax exemption for salaried employees. In India, personal loans generally do not offer tax exemptions or deductions, especially for salaried individuals. It is unless they're used for specific purposes that qualify under the Income Tax Act. I have mentioned those below.
Is There Personal Loan Tax Exemption for Salaried Employees?
No, a personal loan does not offer any special tax benefits. However, you can claim benefits under these scenarios.
Home construction, purchase, or renovation: Interest paid can be claimed under Section 24(b) up to Rs 2 lakh, or Rs 30,000 per year if it’s refinancing the home or a personal loan being used for renovation.
Business investment: When used for business or professional purposes, interest is considered a business expense and is deductible under Section 36(1)(iii) with no upper limit.
Asset purchase: If funds are used to buy assets (e.g., jewellery, shares, non-residential property), the interest can be part of the cost of acquisition. It doesn’t directly reduce taxable income but lowers future capital gains tax on sale.
No tax benefit for personal loans used for general consumption. Yes, possible deductions only if funds are exclusively used for eligible purposes like home renovation, business investment, medical, or education, subject to applicable sections.
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Is Personal Loan Tax Exemption for Salaried Employees?
rahul6
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8 months
2025-06-19T14:39:27+00:00 2025-06-19T14:39:29+00:00Comment
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