Loans can be a savior during an emergency and they don’t have to trap you in debt over a period of time, if you manage your finances well. Even, you can get tax benefits from certain kind of loans. It is true that you could get some great tax deals on your loans. As per the income tax, 1961, government has levied some tax benefits that have been provided been provided to the borrowers to reduce the burden of tax repayment. Let’s have a look on some common loan options that offer tax benefits.

Home Loan: It is one of the biggest loan liabilities that a borrower can avail. The loan quantum and tenure can be high on “Home Loan“ but the tax benefits that a customer reaps on it are pretty good too. It can benefit an individual in two ways. Firstly, the amount paid towards the principal qualifies a tax deduction under Section 80C of the Income Tax Act while another benefit comes from a deduction in the amount paid as interest on the loan. If one has his/her spouse as co-borrower, the deduction can be claimed by each of you. The tax benefits on home loan can only be availed after the construction is completed.If you are planning to sell your home within five years from the date of taking loan then say goodbye to tax benefits.

Study Loan: The government has put various measures to promote higher education in youth and people have become aware to venture out of the country to study. Nowadays, the cost of professional courses such as medical and engineering is still sky-rocketing in India as well as abroad. This is when study loans come in handy as they pave the way to your future. To enjoy the perks of tax benefits on your Study Loan, the loan should be borrowed from scheduled financial institution. The tax benefits to the borrower availing an education loan for pursuing the higher studies come under the Section 80E of the Income Tax Act. This advantage can be availed for maximum of eight years or on the tenure, whichever is applicable.

Personal Loan: It is a type of unsecured loan that offers a plethora of requirements. This loan is a lot easier to obtain without stating the purpose of borrowing it. The most common reason behind applying a “Personal Loan“ is medical emergency, debt consolidation, travelling, higher education and many more. Most of the people tend to miss out the tax advantages on it as not many know this benefit of loan. Generally, the principal amount and charges of interest paid towards loan cannot be deducted for tax exemptions but you can claim the benefits if you are using the borrowed amount for home renovation.

Now you have a guide that if the loans are handled responsibly, they can help you plan your finances in a better way. The tax benefits are the fantastic offers provided on Home Loan, Study Loan and Personal Loan. If you are looking for a loan from above mentioned categories, just give them a shot.