How To Claim Business Loan Tax Deductions Under Section 80C?
Get to know the whole process of claiming business loan tax deduction with this easy to read guide by IIFL Finance. Visit to know more about section 80C here!
Starting a business from the ground up successfully is the dream for many in India. However, many budding entrepreneurs compromise on their dreams of starting a business as it needs a high capital amount for infrastructure and other operational activities. Business loans have become ideal financial products for budding entrepreneurs to raise adequate capital and get tax deductions under Section 80C.
This blog will help you learn about the process of claiming tax deductions under Section 80C when you avail of a business loan.
What Is Section 80C?
Section 80C of the Income Tax Act 1961 includes numerous tax-saving investments to claim a tax deduction of up to Rs.1.5 lakh. For example, if your total taxable income is Rs 10,00,000 you can lower it to Rs 8,50,000 by investing in 80C tax-saving options. Some tax-saving instruments under Section 80C are Public Provident Funds, National Pension Scheme, Unit Linked Insurance Plans, Business Loans, etc.
Business Loan Tax Deductions: What Is Tax-Deductible?
When you avail of a loan for business, you have to pay interest on the principal amount, which is stretched over the tenure of the loan. Under Section 80C, the interest paid on the business loan is tax-deductible and can be written off as payments made for business expenditures while filing income tax under the applicable slab.
How To Claim Business Loan Tax Deduction Under Section 80C?
The interest paid by the borrower is deductible up to Rs.1.5 lakh from the total taxable income of the borrower. For example, if your total taxable income is Rs.10,00,000 and you have paid Rs 1,00,000 as business loan interest, you can claim the interest amount as a tax deduction to lower your taxable income. After claiming the deduction, your total taxable income will be Rs.10,00,000-1,00,000 = Rs.9,00,000.
Some Things To Remember While Claiming Business Loan Tax Deductions Under Section 80C
Here are some things you should remember while claiming tax deductions under Section 80C for your loan for business:
• The interest paid on a loan for business every month by the borrower is tax-deductible under Section 80C.
• The principal amount is not considered a tax deduction as it is part of the gross income.
• Interest paid on any type of business loan is eligible for tax deductions.
• The interest paid on any personal loan availed for business is also tax-deductible.
Get An Ideal Business Loan With IIFL Finance
IIFL Finance is the leading financial services company in India with decades of experience and a host of customer-oriented financial products, including loans for business. IIFL Finance business loan is the ideal product to fulfill all of your business needs.
IIFL Finance business loan interest rate is attractive and affordable to ensure you do not have to cut down on essential expenses of your business. Through extensive market research, the loan process is tailored to ensure that it is at par with the best business loan in India.
Q.1: Can I get a tax deduction on the business loan taken from IIFL Finance?
Ans: Yes, the interest paid on the business loan taken from IIFL Finance is eligible for tax deduction under Section 80C of the Income-tax act 1961 up to Rs.1.5 lakh. The interest amount will be deducted from your taxable income, and you will have to pay tax on the reduced amount.
Q.2: Why should I take a business loan from IIFL?
Ans: IIFL Finance loan for business is a combination of unique borrower-oriented features and extensive market research-based factors to ensure your business gets the required capital to succeed.
• Instant loan amount up to Rs 30 lakh
• Easy and online application process
• Instant credit of loan amount to your bank account
• Affordable EMI repayment options
Q.3: What are the eligibility criteria to apply for a business loan?
• Established business operating for more than six months at the time of application
• Minimum turnover of Rs 90,000 in the last three months from the time of application
• The business does not fall under any category or list of blacklisted/excluded businesses
• The office/business location is not on the negative location list
• Charitable organizations, NGOs, and trusts are not eligible for a business loan