Interest on personal loan can be claimed as income tax deduction in some cases. Details here

How can I avail tax benefits for personal loan taken? Can I claim any benefit for repayment of the personal loan? 

Answer: No tax benefits are available for repayment of a personal loan. However, interest paid on a personal loan can be claimed as a deduction depending on the ultimate use of the amount borrowed. So in case the amount of personal loan has been used for the purchase, construction or repairs renovation of your house property, you can claim the interest under section 24(b) within prescribed limits, provided you are able to conclusively prove that the personal loan was in fact used for the stated purpose. The aggregate of interest on all monies borrowed for the above purpose can be claimed up to two lakhs in a year if the house property is self-occupied. In case the personal loan has been used for a let out property, entire interest paid can be claimed against the taxable rental income subject to a restriction of set off of losses under the house property head, for all the properties taken together, against other income during the year being restricted to two lakhs. Any loss remaining unabsorbed beyond two lakhs is allowed to be carried forward for set off against the house property income in eight subsequent years. 

In case you are carrying on any business or profession and the money borrowed on a personal loan has been used for your business or profession, you can claim the interest paid on such personal loan as business expenditure under Section 37(1). The same can be claimed even if you have taken the personal loan for the purpose of buying any fixed asset like vehicle etc. Please note that no tax benefits are available for interest paid on personal loan used for any personal use like marriage, holidays etc.

Balwant Jain is a tax and investment expert and can be reached on jainbalwant@gmail.com and @jainbalwant on Twitter