Tax Benefits on Business Loan in India

In essence, borrowers can benefit from a business loan by deducting the interest amount from the business expenditure to arrive at the taxable amount. It is thus an effective tool for Micro, Small and Medium Enterprises (MSMEs) to lower the tax liability and use the funds for expanding the business. The principal amount availed from the lender is, however, not tax-deductible.

2. Business Expenses

Business expenses incurred to run and maintain operations can also be subtracted from the overall business revenue to arrive at the taxable income. Below is the list of business expenses that are not a part of business revenue. (Gross Revenue - Tax-deductible Expenses = Taxable income)

• Wages paid to the employee

• Office rental cost of the office premises

• Office supplies such as stationery

• Expenses incurred on the insurance of business

• Advertising and marketing expenses

• Bonus paid to the employees

• The personal loan available for a business is also tax-deductible.

• If the payment is in the form of EMI, which constitutes part of the principal amount and the interest, only the interest amount will be tax-deductible and not the entire EMI. One can seek help from a professional financier to understand the equated monthly instalments' interest component.

Business loans can prove to be a turning point for an entrepreneur or a seasoned business owner. The capital can either be used to expand operations or set up a new business. The tax benefit on business loans via interest payment and certain business expenses such as wages or bonuses paid to employees can decide to avail a business loan, a quick one. Entrepreneurs can apply for a Bajaj Finance Business Loan, available on Bajaj Markets. Your loan application on Bajaj Markets can be approved in just 2 minutes, and the entire process requires minimal documentation.