Income Tax Benefit on Interest on personal Loan, Section 24
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Tax Planning for Salaried Employees
Last Minute Tax Planning for Salaried People
March 24, 2017

Section 24 – Income Tax Benefit on Interest on Personal Loan

Escalating realty prices have left borrowers struggling for money even to meet the down-payment requirement. If you have resorted to a personal loan to bridge the gap between housing loan and down-payment, then there is a glimmer of hope in terms of a tax benefit.

Typically interest paid on personal loan taken for consumption purposes is not available for deduction. But what matters here is the end use of the funds and not its source. Under the Income Tax Act, as per  income from house property  is computed after deducting the interest paid on borrowed capital, using which the property has been acquired, constructed, repaired, renewed or reconstructed.

So the Act per se does not distinguish on the type of loan – whether home or personal loan – used to meet the requirements of purchasing or refurbishing a property.

The principal amount repaid on the personal loan cannot be claimed for deduction unless the loan was taken from a bank or other prescribed lender. Nonetheless, the interest amount paid annually for a personal loan taken to acquire, renew, repair or reconstruct a house property can be claimed for deduction.

For self-occupied properties interest amount up to Rs 1.5 lakh can be claimed, while there is no such ceiling applicable if the taxpayer has purchased a second property, which is let out.

Note that the interest portion cannot be claimed as a tax deduction if the property purchased is at the construction stage.

Also, preserve the bills as one would have to prove that the borrowed sum was utilised to pay for the home or home repairs to claim the deduction.

 

How H&R Block can help you?

Saving taxes and e-filing of income tax return accurately becomes very easy when you have professional help. This is where we come into the picture. You can either use our intuitive tax filing platform to easily file your tax return or let our tax experts file it for you. At H&R Block we have a team of in-house tax experts who can file your income tax returns accurately while giving you maximum tax benefits.

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Neha Joshi
Neha Joshi
Neha Joshi is a Chartered Accountant and an Assistant Manager at H&R Block. She is the Head of Content and is responsible for strategizing the entire content for website, PR and social media. She comes with a rich experience in publishing where she wrote books for various international professional qualifications. She was also a trainer for the subjects she wrote.

83 Comments

  1. s k punia says:

    i have taken home loan from s b i.but by the loan amount i cannot complete my home.so due to lack of money I HAVE TAKEN PERSONAL LOAN from central bank of india and complete this . please tell me can I take rebate on personal loan also.

    • HRBlockIndia says:

      Any loan that is taken for the purpose of buying a house is treated as loan for house. Hence you can claim the interest amount that you pay on this personal loan as a deduction u/s 24 from your income under the head ‘Income from house property’. In simple words you can claim this interest on personal loan as a deduction from your taxable income.

  2. Harish says:

    I have taken Personal loan for House Renovation Purpose, I am paying Interest of Rs. 50k per Year, Pl suggest me can i take Income tax exemption for the interest Paid.

  3. shashu32 says:

    Hello,
    I have taken personal loan to buy a land worth 10lakhs. what are the various options I have to claim tax benefits.
    I am currently also pursuing Masters. can I avail education loan to get tax benefits further?

    Thanks,

  4. saurabh kumar says:

    can I claim for deduction of personal loan interest or repayment of principal amount ??? if personal loan taken for marriage purpose ( other than purchase or repair of home )

  5. Sandeep Jain says:

    What evidence I need to produce in order to claim income tax in interest paid on personal loan taken for buying my house. Also this transaction has happened 2 years back….seek your guidance in getting income tax benefits. Thanks Sandeep

    • HRBlockIndia says:

      Hi Sandeep,

      Interest paid on personal loan taken to purchase house property can be claimed as a deduction. However you cannot claim principle repayments as deduction. If this interest is pre-construction period interest then you may claim this from the date you have received possession until 5 years in 5 equal installments. The construction should be completed in 3 years. However if it is post construction period interest then you may claim the interest deduction each year as you pay it.

    • Jashobanta Chhatria says:

      can i claim the tax exemption on repayment of principal and interest amount on state bank personal loan ?

  6. ganesh shetty says:

    Sir,

    I have took loan for marriage and borewell (which water used for agriculture purpose) purpose,Please confirm can i get exemption from Income tax.

  7. Pravin says:

    I have take loan on car it is exempted in income tax or not

  8. Pravin says:

    Car loan is exempted in income tax or not

    • HRBlockIndia says:

      Hi Pravin,

      There is no exemption for salaried individuals for car loans under the IT Act. However if you have income from business or profession you may claim these expenses as a deduction from your taxable income.

  9. vicky says:

    sir I have it return of 2 years n provisional of current yeAr n wl I got personal loan or home renuation loan..? plz reply

  10. shweta says:

    Can I get tax extemption on personal loan taken for sis marriage

  11. shubham garg says:

    I take a loan for repair my home from individual . can I get deduction of 24E ( interest paid on home loan)

  12. amrita gupta says:

    You have mentioned in your article that the principle amount repaid on the PL annually cant be claimed as deduction unless the loan was taken from a bank or other precribed lender. I have taken PL from nationalised bank and utilised the same towards purchase of home. can i claim deduction for principle amount also?

  13. DR GOKUL LAL MEENA says:

    I GOT HOME EQUITY LOAN MAX-GAIN, MAY I BENEFIT INCOME TAX ? PLEASE TELL ME ON URGENTLY.

    THANK YOU
    DR G L MEENA MOB 9414030404

  14. Vijay says:

    I have taken home loan from teacher co-op society. can I take benefit in IT form u/s 24 & 80c.

  15. Digvijay Singh says:

    Hello,
    I have taken personal loan to buy a land worth 5.5 lakhs is exempted in income tax or not.
    Thanks,

  16. Adithya says:

    Hi ,

    Am taking a mortgage loan , so how it will be benefited for my tax exemptions.

    Thanks

  17. Subrahmanyam Murari says:

    Hi,

    I have 3 practical issues, off-course it will be helpful to boost up our knowledge, these are

    1) I have taken some personal loan and it is using for the construction of a house, so is it eligible to take tax benefit U/s 80G, i have gone through the section it is showing we can take but subject to proof of evidence whenever asked by the department.

    2) I am using post paid mobile plan, where as the owner of that mobile is on my friends name. So can i get the deduction on my mobile bills which is debiting through either my debit or credit card only. But the problem is it was in the name of my friends name.

    3) this is similar to 2, i am using wifi (internet) my room this is also in the name of my friend name only, where as every month amount is deducting from my account. So can i get the eligibility to deduct actual amount paid from my account.

    So could you please look into that and let me know the answer along with proper sections to reverify it.

    Thanks & regards

    • Nikita says:

      hello,
      1) You can take credit of installment of loan purchased for CONSTRUCTION OF HOUSE UPTO RS.150000
      2) You can not take credit of Post paid bill of Mobile
      3) you also can not take credit of internet usage.

  18. meenakshi says:

    i have taken loan for house renovation purpose from private bank. pl.suggest me can i take income tax exemption for the paid interest.

  19. Raisuddin Khan says:

    I had taken personal loan to buy the property. Now while e-filing my CA is asking me to get the the proof from bank that they paid me for property purpose. Bank says its personal loan and hence they mention in the sanctioned letter ” personal loan” only. I CHECKED WITH 3 BANKS AND RECEIVED THE SAME REPLY FROM THEM THAT they can’t mention property purpose or any purpose except “personal”

    My CA is saying that bank has to give in wiriting that the loan sanctioned is for “property buying” which the bank denies as per their procedure.

    My query is that can i submitt the bank statement ( amount credited statement ) , bank sanctioned letter (personal loan) along the property agreement copy to my CA to consider my investment for tax benefit OR I HAVE TO GET THE COPY FROM BANK STATING THE LOAN THEY SANCTIONED IS FOR PROPERTY .

    • RK says:

      looking to hear from you.

    • HRBlockIndia says:

      Hi Raisuddin,
      You need to show that the amount you received as personal loan has been used by you in buying property. You can use your bank statement (showing all the relevant transactions) to prove that you spent the money for purpose stated earlier. You can contact our tax experts to receive more help on this topic. Click here to send an enquiry.

  20. Dharmendra Pandey says:

    I have taken personal loan for house renovation. I have submitted document to my employer but they have rejected and the tax has been deducted. Could you please tell me the interest paid for my personnel loan for house renovation is eligible for tax benefit . If yes, please let me know which all document needed to submit and where. Thank you!!

  21. Anand Kumar Singh says:

    Hi Sir,

    I have taken a personal loan from Bank and used that amount to build my own house . Can I get the tax exemption from IT?

  22. ROMESH KUMAR DUTTA says:

    Sir,

    My wife has taken Personal Loan for completion of renovation/reconstruction work of our self occupied house which is registered in my name. Can she claim income tax rebate u/s 80C & 24?

  23. Sanju Komar says:

    Dear Sir,
    I have changed company in Sept-2015, So I got 2 form-16 from both employers. In previous employer form-16(before Sept-2015) my HRA & LTA are not considered for exemption, Now how could I claim it.
    Also I have purchased a home 3 years before, for purchasing I haven’t incurred housing loan, I have taken 2 personal loans & arranged some amount from friends, still now I haven’t claimed tax benefit on home. Shall I claim the tax exemption on it? If yes, what is procedure? what documents required to filing?
    Please do needful for both concerns

  24. Janki Mishra says:

    Hey,
    I took personal loan to do the down payment and registration of property . Can I claim this.
    Also do you assist in tax planning and itreturns. Pelase reply.

    • HRBlockIndia says:

      Dear Janki,
      You can claim deduction if you can prove that it has been used for registration of property. Make sure that you have all the related documents safe with you. Yes, we do assist in tax planning and filing IT returns.

  25. Sanju Komar says:

    I have purchased a home 3 years before, for purchasing I haven’t incurred housing loan, I have taken 3 personal loans & arranged some amount from friends, still now I haven’t claimed tax benefit on home. Shall I claim the tax exemption on it? If yes, what is procedure? what documents required to filing?

  26. Balaji says:

    I have taken a personal loan for constructing house, Please let me know how to project it into tax exemption.

  27. Ravi says:

    I am a salaried individual and I have taken personal loan on credit card . Is it taxable in India ?

  28. k kumar says:

    hi, i am a salaried individual. i have taken a personal loan for constructing house, but that land registered on my mother name. can i claim this as incometax benefit.

  29. dinesh says:

    Hiii Sr I have taken a personal loan from sbi can I get tax rebate & pls assist me for e filling of itr

  30. Meeravali says:

    Hello,

    I have taken personal loan to buy a land worth 10lakhs. what are the various options I have to claim tax benefits?

    Thanks.

  31. Meeravali says:

    Hi,

    I have taken a personal loan for construct a house, but that land was registered on my Wife name. can i claim this as income tax benefit?

    Thanks,

  32. Rakesh Kumar Gupta says:

    Well Explained…But Plz describe what does it mean ” Note that the interest portion cannot be claimed as a tax deduction if the property purchased is at the construction stage “.

  33. Vikash Agarwal says:

    Hi HR Block,

    I have taken a loan from a private company for the purchase of a house and have repaid them with interest in the same year. Am I eligible to take the tax deduction on the interest portion.

    Please advice.

  34. Ashutosh says:

    I am in process of funding home purchase. For this i am taking home loan from nationalized bank. Additionally i am taking loan from my close relative to meet the requirement.
    I am clear on the home oan taken from bank.

    I wish to know if i can show the interest paid to my relative against loan taken for home purchase. I can show the relavant transactions receipts.
    Pl revert to resolve my query

  35. Ganesan says:

    I have taken SBI credit card loan for that I am paying principal Rs. 3645.51 and Interest Rs.4040.74 total EMI Rs. 7,686.25. For the interest portion tax levied 15% Rs. 606.11. My query whether 606.11 tax on interest portion deduction allowed in income tax as salaried individual.

  36. kartik sahoo says:

    I want to take personal loan 1 lack from SBI through by IT return.can I apply it is eligible.

  37. Faijal says:

    hi, i am a salaried employee. i have taken a personal loan for constructing house, but that land registered on my father name. can i claim this as incometax benefit. Please let know about the same matter

  38. Vijay R says:

    Hi I Have taken personnel loan and I am salaries employee in private firm getting monthly take home 30879.
    Is it possible for me show this loan for income tax exemption.

    Please advise on my email id.

    Thanks,
    Vijay R

  39. Arun says:

    Can I use the emi amount for tax deduction which am paying to the finance company for buying my bike?

  40. Mohan says:

    I have taken loan from my wife for buying a resale flat. Can I claim income tax deduction on the interest I am paying to my wife for that loan? CAn I continue to pay interest without paying back the principal to avail income tax deduction!

  41. Narasimha Sumanth says:

    What evidence I need to produce in order to claim income tax in interest paid on personal loan taken for buying PLOT/ SITE. Also this transaction has happening from last 2 years ….seek your guidance in getting income tax benefits. Thanks Sumanth

  42. Shyam Sundar says:

    Hi,

    I have taken personal loan for house renovation, as I read the blog I understood that the interest paid can be shown under Section 24(b). Now the house that was renovated is under my father’s name, Can I show the interest paid under Section 24(b)?

    Thanks,
    Shyam

  43. VIJAY PATIL says:

    I have taken personal loan from SBI for purchasing of home/plot to construction of home. I am a central govt employee (Para military (Border Security Force)) and want get income tax benefit. Which documents I have to produce?

    Is a personal loan can give rebate, if purchase farm or agricultural property?

  44. narendra bisht says:

    if we have taken loan from bank
    1 ,this is income or not
    1, if this is income so should i have to pay income tax on personal loan which is taken from bank
    and i want to know about income tax what i should do for learning income tax slab which book is important for preparing income tax

  45. Ravi kumar says:

    I have taken personal loan for house renovation. I have submitted document to my employer but they have rejected and the tax has been deducted. Could you please tell me the interest paid for my personnel loan for house renovation is eligible for tax benefit . If yes, please let me know which all document needed to submit and where. ! kindly reply

  46. Yogesh says:

    I paid EMI of my fathers agri loan, Am I eligible to claim for tax benefits ?

  47. Rakesh V Devare says:

    Dear Sir/ Madam

    I have taken personal loan form HDB bank, can i saw claim in incom tax for dedcution ?

  48. SHAIKH MUSHTAQ says:

    PERSONAL LOAN GET TAX BENEFIT

  49. Amit Kumar Singh says:

    I have purchased a residential plot on the bank loan can I take the tax benefits any amount principles and interest of loan amount plz guide me

  50. Deepak Kumar Verma says:

    I am a salaried class person borrowed a flexi loan (Over Draft) from Bajaj Finserv. Can I claim for the income tax rebate under any section for the interest part I pay monthly to the Bajaj?

    Please reply me on my gmail.

  51. Udit rathaur says:

    I have taken personal of 17lacs for residential house. Can I claim it in itr file.

  52. M.Arumugam says:

    I want to get personal loan to buy a plot on my daughter name. Can I get a tax deduction for the interest paid on loan under section 24 b

  53. JAY PRAKASH SINGH says:

    Hi,
    I have took Flexi Loan Can I claim for the income tax rebate under any section for the interest part I pay monthly to the Bajaj?

  54. sai says:

    I have taken a loan from HDFC bank by mortagaging my property and interest was paid on loan borrowed and used for the business purpose
    What can i do , can i claim it as deduction under house property or usiness

  55. A Y Sharma says:

    Hello this is A Y Sharma i have taken 15 Lakhs personal loan for constructing a new house in my village.so is there any chance to get tax benefit on the interest i pay to the bank. I m a government employee please suggest me how can i save my tax for the loan i have taken

  56. achyuth says:

    I have an education loan. I am working in a company and didn’t declare to the company that I am paying the EMI for my education Loan. Can I declare this education loan while filing ITR and get the refund if any?

  57. Naquee alam says:

    Hello sir.,
    My income from salary is around 450k per annum. I am thinking to take a loan to reconstruct my house. How much exemption can i get after taking loan?

  58. RAVINDRAN KV says:

    Hello,

    I have taken personal loan 2 lakhs to buy a HOUSE worth 30 lakhs.IN THE NAME OF MY WIFE ,
    what are the various options I have to claim tax benefits.

    Thanks,

  59. Mohammad Tauqueer says:

    Hi,

    I am a salaried person, I have taken personal loan for the purpose of land purchase and there is no construction on it. can I claim the interest paid on this loan for FY? and what evidence should I produce?

  60. Abhilash Chandra says:

    I have a prop business and taken a Home Loan last Financial Year i.e. 2017-18.. This year I want to take benefit of Interest on HL u/s 24 (b)..
    Now my question is that, Can I debit this interest amount to my business profit and loss a/c ?? In my opinion “No” ..Pls. Guide..

  61. devender says:

    I have taken home loan and I am the 100% loan intrest payer for the bank as my wife is a house wife with zero earning . the Bank statement showing my name and 100% interest and principle amount has been deducted from mu salary. I am a deemed owner as the property is in the name of my wife but all the loan documents and bank documents are having both the names.

    Please tell me whether I am applicable for the rebate of loan .

  62. Amrita says:

    Thanks for the best article, How can I get a top up personal loan? Already I have taken personal loan from Finance Buddha Now I want to take a top up personal loan so How can I get it.

  63. Charan says:

    Hi,
    I have taken personal loan for renovation of my home. The property is owner is my grand father.
    To claim the interest spent for this loan, only account statement or expenditure bills are sufficient or any property related document also needed ?
    Please suggest.

    • H&R Block India says:

      Hi Kanhu,
      To claim the interest on home loan you should be a co-owner in the property as well as a co-borrower in the loan. If this is not the case, you cannot take advantage of the interest deduction benefit.
      In order to take help in such tax planning you may contact us at enquiry@hrblock.in

  64. Parth says:

    Can I get a Tax deduction for a Personal loan which is taken against property? Property is on my grandmother name, taken loan for reconstruction of same property? Please guide me.

  65. manjunath says:

    personal loan availed to clear my fathers backlogs, is there any option for exception of income tax?

  66. Virendra says:

    Hi iam Virendra. I have taken a housing loan. Iam an govt employee. I have paid tax 12881/- on March. While iam filing my returns online, I have given principal amount under type of house property and interest amount under 80EE. there it showing the tax as 10864/- only. Is this correct. Shall I show my both principal and interest amount as deduction. Please assist me

  67. APD says:

    Hii i am an slaried person & I have taken two wheeler loan from HDFC bank , can i take benifit of interest paid on my two wheeler loan. Please guide me.

  68. SHELESH MULCHANDANI says:

    I HAVE TAKEN PERSONAL LOAN FROM ICICI BANK FOR EXTENSION OF HOUSE WHICH IS MY PARENTAL HOUSE. I AM NOT OWNER OF THE HOUSE.
    SHALL I ELIGIBLE FOR TAX EXEMPTION AS THE EMI IS DEDUCTING FROM MY BANK ACCOUNT. AND MY FATHER IS NOT WORKING ANYWHERE. EVEN I AM ALSO NOT TAKEN HRA DEDUCTION DUE TO LIVING IN PARENTAL HOUSE.

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