From mint · Sheetal Goel · · 1m 10s
Interest-Free Loans: Tax Rules Explained
How employer loans up to ₹20,000 are tax-free under Indian income tax rules.
In brief
How employer loans up to ₹20,000 are tax-free under Indian income tax rules. Interest-free loans from employers under ₹20,000 or for specified medical treatments are tax-exempt under Indian income tax rules. Originally reported by mint.
Quick answers
- What is an employer loan under tax rules?
- An interest-free or concessional loan from an employer is taxable as a perquisite under income tax rules.
- How is the taxable value calculated?
- Taxable value equals interest at SBI rate minus interest paid by employee on the loan.
- When is an employer loan taxable?
- Loans exceeding ₹20,000 with no medical treatment exemption are taxable under salaries.
- What is the key takeaway from Interest-Free Loans: Tax Rules Explained?
- Interest-free loans from employers under ₹20,000 or for specified medical treatments are tax-exempt under Indian income tax rules.
What is an employer loan under tax rules?
An interest-free or concessional loan from an employer is taxable as a perquisite under income tax rules.
How is the taxable value calculated?
Taxable value equals interest at SBI rate minus interest paid by employee on the loan.
Taxable steps for perquisite calculation
Calculate monthly loan balance, apply SBI rate, deduct employee interest, remaining amount is taxable.
Loans up to ₹20,000 are tax-exempt
Interest-free or concessional loans of up to ₹20,000 are exempt from income tax.
Medical loans qualify for tax exemption
Loans for cancer, tuberculosis, AIDS, and other specified treatments are tax-exempt.
Exemptions don't apply for insurance reimbursements
Tax exemption reduces by amount reimbursed by insurance companies for medical expenses.
Loans exceeding ₹20,000 are taxable
Interest-free loans over ₹20,000 are taxable as perquisites under income tax rules.
When is an employer loan taxable?
Loans exceeding ₹20,000 with no medical treatment exemption are taxable under salaries.
Here's the gist
Interest-free loans from employers under ₹20,000 or for specified medical treatments are tax-exempt under Indian income tax rules.
