Quick personal loans are a ballooning trend these days, and thanks to instant personal loan platforms, this trend is gaining momentum everyday. Since personal loans are unsecured and can be availed easily, a larger number of borrowers find themselves going for these loans to procure funds for their personal needs. These requirements can be anything, such as a wedding, vacation, various education expenses, or other personal projects.
Although personal loans are a quick way to arrange funds, fluctuating interest rates are always a subject of concern for borrowers. This makes tax deductions on personal loans a much needed benefit by borrowers. But the most important question here is, do we actually get tax deductions on personal loans?
Does Indias Income-tax Act (ITA) Allow Tax Deductions on Personal Loans?
When we talk about tax deductions on loans, there are two aspects of any loan, and each aspect is tackled differently by Indias income-tax act in terms of tax benefits. These two aspects are:
- The principal amount of the loan
- The interest charged on the loan
If one is to answer the question about the possibilities of similar tax deductions on personal loans as we get on other types of loans, the plain and simple answer would be “No.”