Personal Loans: Tax Implications, Interest Rates, and Smart Repayment Strategies
Business
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Moneycontrol•19-01-2026, 18:56
Personal Loans: Tax Implications, Interest Rates, and Smart Repayment Strategies
- •Personal loans are considered a liability, not income, hence they are not subject to tax under the Income Tax Act, 1961.
- •While no tax deduction is available on personal loan repayment for general expenses, tax benefits can be claimed if the loan is used for specific purposes like property purchase (Section 24(b)) or business investment.
- •Interest rates for personal loans typically range from 10% to 36% per annum, often higher than secured loans due to their unsecured nature.
- •To minimize costs, compare offers from various lenders, choose the lowest interest rate, and be aware of hidden charges like processing fees.
- •Platforms like Moneycontrol offer instant personal loans up to Rs 50 lakh with competitive interest rates starting from 10.5% and a paperless application process.
Why It Matters: Personal loans are tax-free as they are not income, but strategic use can unlock tax benefits.
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