Loan Query

pradeep200417

Shunya
Adept
I have one doubt regarding taking loans.
If i take loan from some person and not from a bank.
Can I get tax exemption, like in the case of Loans from Bank?
 

bottle

Caffeine Addict
Staff member
Doubt it, Banks provide a Income Tax certificate that has to be filed along with your returns for exemption.

Edit: This is for housing loans
 

babhishek

Well-Known Member
Skilled
I am also talking about housing loan. But instead of taking it from a bank, I can take it from a relative.


Again, dont. take it from a relative,take the loan from the bank, use the relative to payback the loan, and then payback the relative...
thats better


an individual loaning you money is not a housing loan, as per definition.
 

onlyravi

Godly Modly...
Skilled
Taking it from relative would save me the interest rate.
No you cant take a "house" loan from a relative. You can but take gift certificates or loan as a personal loan. Not much tax relief there.
Instead like @babhishek mentioned take a loan from a nationalized bank for say a lesser duration like 10 years. And prepay it using the money your relatives are giving you. But there is a catch.
You still need to prove to the bank where your relative got that money from and some legal agreement on him lending/gifting you the money.

Option 2. Say if property is of 30Lakhs.
Your relative/other individual is giving you say 5Lakhs.
Then do the registration of the property at the value of 25L. Pay the 5L cash to the seller. (This amounts to paid in black ). And for the remaining amount get the loan done or pay from your pocket. But again there are limitations on how much you can undermine the value of your property.

Option 3: Say your relative is giving you 5Lakhs cash. Get receipts made from some local jeweler saying that you sold your ancestral gold to get that money. Now that money becomes white and you can use it anywhere as long as you declare in your tax return filings.
 

puns

Well-Known Member
Staff member
there is no tax exemption on principal amount. if you pay interest to the relative, you can claim tax benefit after your relative gives you a certificate.
But your relative has to pay tax on income earned which is the interest amount you are paying them.
 

agupta02

Well-Known Member
Disciple
Just adding to what puns said, your relative can further offset the interest income against any business loss.
 

sbhas2k

Well-Known Member
Adept
You would be saving a lot if you take a loan at 0% which obviously defies the purpose of tax exemption. So forget about any tax exemption and enjoy the interest free loan..
 
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