No Tax Benefit For Salaried Individual On Interest Paid On Personal Loan

You can claim tax benefit for interest paid on personal loan only if you use the loan amount to buy, construct or repair your house. If unlisted shares were listed before February 1, 2018, the fair market value of the shares as on January 31, 2018 will be taken as the cost. A senior citizen does not have to pay any advance tax in case he/she is not engaged in any business or profession

Balwant Jain

Updated on: 21 October 2023 9:36 am

I am a salaried person and I have taken a personal loan. Can I claim any tax benefit for the interest paid on this loan?

For a salaried person, there is no tax benefit available in respect of interest paid on personal loan taken for personal use. However, if the amount of personal loan has been used for purchase, construction or repairs etc of your house and you can establish this, then you can claim tax benefit on the interest paid on such loan under Section 24(b) of the Income-tax Act, 1961.

Do note that the overall interest for up to two self-occupied house property taken together will not exceed Rs. 2 lakh. There is not such limit for interest in respect of property which has been let out, but a loss of up to a maximum of Rs. 2 lakh under the head ‘house property’ can be set-off against other taxable income, and the loss not set-off can be carried forward for set-off against income from house property for eight subsequent years.

I had purchased some unlisted shares without any paying securities transaction tax (STT), which subsequently got listed. I have sold these shares during the current financial year through a share broker on which STT was paid. How will my profits be taxed?

If the unlisted shares were listed before February 1, 2018 the fair market value of the shares as on January 31, 2018 shall be taken as the cost of shares. However, if the shares are listed after January 31, 2018 the indexed cost of acquisition shall have to be taken as the cost of acquisition.

Since STT is being paid at the time of sale, such transactions will get covered under Section 112 A of the Income-tax Act, 1961, and the profits shall be taxed at 10 per cent after initial exemption of Rs. 1 lakh if the shares are held for 12 months or more. If the shares are held for less than 12 months, the profits would be treated as short-term capital gains and taxed at a flat rate of 15 per cent.

I am a retired senior citizen. Do I have to pay any advance tax? My income is only from my bank interest and capital gains from mutual fund investments.

A senior citizen does not have to pay any advance tax in case he/she is not engaged in any business or profession. So you do not have to pay any advance tax during the financial year.

You can discharge your tax liability while filing your income tax return (ITR), but do ensure to file your ITR by July 31, 2024 and pay the tax at the same time.

In case you fail to file your income tax return by the due date, you may have to pay interest for delay in filing your ITR as well as for delay in payment of taxes for the period of delay.

The author is a tax and investment expert