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Tax Benefits on Business Loans in India

· business loan india
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In need of funds but hesitating on availing a small business loan because you are not certain how it will affect your taxes for the year? Well, you do not have much to worry about. Most of the Business Loans available in the financial market are tax deductible. According to the Income Tax Law 1961 of India, raising funds through loaning is not considered same as earning money for business. Hence, the interest that is levied on the Business Loan itself is considered tax deductible.

Benefits of Availing Business Loan:

There are several benefits that Business Loans offer to borrowers. Collection of necessary funds is just one of many. Some of such benefits are listed below:

· Most of the Business Loans are available in flexible repayment options, which allow the loan reimbursements a bit more convenient for the business owners across the country.

· The interest charged on availed loan is tax deductible, as it is a business expense. The following reduction in interest payments drastically lightens the tax burden off the borrowers' shoulders.

· Availing Business Loans are generally more convenient for business owners rather than making capital investments as one can raise massive funds at favorable interest rates.

Tax Benefits on Business Loans in India

There are many tax benefits that a company can avail after opting for a Business Loan in India. You can claim the interest paid against business loan taken for fulfilling the needs of your business, it is considered an expense and is tax deductible. In general, the total amount of loan is also not taxable. This helps borrowers in reducing their total tax. Further, the repayment amount is also not taxable.

Principal on Business Loan is NOT Tax-Deductible

You can include interest on loans as the expenses for your business but you cannot consider Principal on Business Loan as tax deductible. The principal amount that is borrowed by a business is never tax deductible. The principal on Business Loans in India cannot be deducted from your gross business income while calculating annual taxes. However, a Business Loan is not an income for your business, hence, it will not be included in income for the business.