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Personal Loans do not attract income tax as they are not your income rather they are your liability. You do receive credit if you avail a Personal Loan but that is something which you have to pay back to the lender in due course of time. Therefore, it is not your earning. However, if you invest it in non-speculative investments such as FD then you may have to pay taxes.

If you are availing a Personal Loan then don't be afraid as it does not attract Income Tax at all. However, you must be careful when you avail a Personal Loan. You must avail it from a reputed lender such as Bajaj Finserv. The reason for that is, it is more likely to get an attractive deal from a leading business body rather than less popular one. NBFCs are slightly more flexible as compared to a Banks. Suppose you have a poor CIBIL score then Banks will right away reject your application but NBFCs will offer you a loan at a higher interest rate as there is risk involved.

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Q: Can a personal loan attract income tax?
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