How to Save Income Tax Benefits on Loans in India?

2025-06-05

1167 Views

4 minutes read

Begin securing your future

Full Name* Please enter correct name Please enter the Full name

Mobile Number* Please enter valid mobile number Please enter Mobile Number

Email* Please enter valid email Please enter Email

I agree that even if my contact number is registered with NDNC / NCPR, I would still want the Company to contact me on the given number and email id for the clarifications/product information sought by me and agree that I have read and understood the Privacy Policy and agree to abide by the same.

...Read more Consent is required

Locate branch

Resume journey

Pay Premium

Live Life More Confidently

Get best insurance from our experts

Name is required Name should be Valid

Mobile Number is required Mobile Number should be Valid

Email is required Email should be Valid

DOB is required DOB should be Valid

Annual Income*

< 3 3-5 5-7 7-10 > 10

Annual Income is required

Please tick to proceed further.

Thank you for your interest in our product. Our financial expert will connect with you shortly to help you choose the best plan.

How do Loans Help us Save Income Tax in India?

Have you ever wondered how loans help in tax saving, and in what situations? The provision for tax deduction on payment of EMIs on home loans or personal loans has been made in order to make housing more affordable. Various sections of the Income Tax Act 1961, have provisions under which the taxpayer can claim tax benefits on repayment of loans. So how do loans help in saving tax? Here are a few ways.

Under Section 80EE:

If you have purchased your first house through a home loan, you are eligible for tax benefits of up to. ₹.50,000 on the interest paid on your home loan under Section 80EE. There are, however, a few conditions that you must check before claiming deductions under Section 80EE. Deductions under 80EE are applicable only if:

You have taken a loan from a bank or a non-banking financial institution
The stamp duty value of the house does not exceed fifty lakh rupees.
The amount of loan sanctioned for the acquistion of the residential house property does not exceed thirty-five lakh rupees.
The loan has been sanctioned by the financial institution during the period beginning on the 1st day of April, 2016 and ending on the 31st day of March, 2017
You do not own any other house except the one for which you have availed the home loan.

Click here to use - Income Tax Calculator

Under Section 24:

Section 24 is applicable to home loans availed for a property on which you currently reside. The deduction is applicable on repayment of loan interest and the limit of exemption is ₹. 2 lacs.

Under Section 80C:

Sections 24 and 80EE make provisions for deduction on interest repayment on loans. Under Section 80C, however, you can claim deduction on the repayment of the principal amount of your home loan. The limit for exemption under 80C is ₹. 1.5 lakhs. Section 80C is applicable under the following conditions:

The home loan has been availed for the construction or purchase of a new property
The property has not been sold within five years of purchase
If the property is sold within five years, the taxpayer will have to repay the exemptions claimed on the home loan in the year in which the property was sold.

Under Section 80E:

If you have taken an education loan, you can claim deductions of any amount paid by way of interest. There are a few conditions under which you can claim benefits under 80E for educational loans:

The loan must be availed under the name of the taxpayer to finance his higher education or for the purpose of higher education of his relative
Deductions can be claimed only for 8 years

Tax benefits on personal loans:

You can claim tax deductions on personal loans in certain cases. These pertain to acquisition of assets or renovation, or construction of houses. In case of house improvement and construction of property, you can claim deductions under Section 24 and Section 80C as mentioned above - so yes, if personal loan funds are used towards these purposes, you will be eligible for exemptions under Section 24 and 80C.

Additionally, if you avail a personal loan for business, the interest component of the loan repayment is eligible for deduction. The interest is deducted from the profits made through the business, thereby reducing overall tax liability. On the other hand, if the personal loan is used to acquire an asset, such as stocks, jewellery or property, then the interest component can be listed under the cost of acquisition of the asset, which results in reduced capital gains when the asset is sold. This, in turn, reduces your tax liability.

Conclusion

So this is how loans help in saving tax in India. Taxes can be saved in different ways. Canara HSBC Life Insurance offers an excellent ULIP plan which helps you make tremendous savings on tax. The Invest allows you to save taxes on premiums paid towards the policy under Section 80C, and on the withdrawals made through the policy under Section 10(10D). Opt for the Invest and start saving on your taxes today.

Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.

How can I Minimize My Taxable Income This Year?

Tax Deduction Guide: How to Avail Deductions Under Section 80C?

Tax Savings - Top Selling Plans

We bring you a collection of popular Canara HSBC life insurance plans. Forget the dusty brochures and endless offline visits! Dive into the features of our top-selling online insurance plans and buy the one that meets your goals and requirements. You and your wallet will be thankful in the future as we brighten up your financial future with these plans.