Does Your Business Loan Get Tax Benefits
Business loans are expected at different phases of business exercises like developments, acquisition of working capital, gear and so on, to keep up with reliable income for guaranteeing smooth business tasks. Business loans convey an interest charge which is deductible as a cost from your gross income.
Are business loans tax-deductible in India?
Indeed, business loans are tax-deductible in India. According to the arrangements of the Income Tax Act, 1961 the premium part of the business loan is qualified to be deducted from benefits procured in your business. The Income Tax Act further explains that business loans benefited are not paid from the business, through which the business profits.
Tax Benefits under Business Loan
Interest charge on business loan
Business expenses
Tax Benefit on Business Loans - Key Points
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A business loan can be of various types like a term loan, working capital loan, bill discounting, small business loan, letter of credit, etc.
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Interest charge on all types of business loan is tax-deductible.
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Interest charge on personal loans taken for business is also eligible for a tax deduction.
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Interest on the business loan is normally subtracted from the gross business income.
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Claiming interest on a business loan reduces your total tax liability.
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Tax liability is calculated by deducting total business revenue from total business expenses.
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The principal component of the business loan is not a business expense and is not tax-deductible.
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The principal amount of a business loan does not offer any type of tax benefit
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Repayment component of the loan amount in the form of an equated monthly installment is not eligible for a tax deduction.
Reference; Does Your Business Loan Get Tax Benefits
