Taxation for borrowed money

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bobby_123

Hello. I took a loan of 6 lakh rupees from my father with a promise to pay the 15000/month EMI for the next 5 years.

As of now my plan is to use that fund with my existing fund for Option trading. 

However is the EMI amount is deductible from income tax or not? All the transactions are made using cheques and future EMIs will be paid using net banking.

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No such benefit.

Commentator Commentator
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Loans from family members or friends are not taxable. Whether the loan is with or without interest, it becomes tax-free for the borrower. However, if the lender charges interest from the borrower, he or she has to pay taxes on any interest that is earned from the loan

out of the topic - from my personal experience, always use the extra money you get from passive income or max 10% of your income into trading and in this case never ever take a loan/borrow and use the same for trading as maybe initially you might find success and gives you profits but it will slowly make you believe how about earning more and thereby investing more and that too you are not in equity 

Deal Subedar Deal Subedar
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mhm good suggestion via out of topic:)



my add to it is:

always use money that you are willing to lose in options trading, think of it as you are giving it to a freeloader as donation:) and then you can play this game or else life will be miserable bobby_123

Deal Subedar Deal Subedar
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In any situation Loans are usually not taxable as far as I know SINCE ITS NOT INCOME


Income is taxed LOAN is not taxed

Deal Subedar Deal Subedar
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For PERSONAL LOANS AND LOAN AGAINST SHARES AND LOAN AGAINST ASSETS, THERE IS NO DEDUCTION IN INCOME TAX:)


Your loan from father is considered personal loan kinda bobby_123

House loan and education loan (i think) have deductions in income tax NOT OTHER LOANS

Deal Subedar Deal Subedar
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This all sounds intelligent enough but This is not at all useful.

First of all, if you make this a loan and  pay your father back, your father becomes a lender and the interest he earns, he will have to pay taxes on it.

Secondly, you can deduct the interest portion of the payments from your profits if you declare the whole trading transactions as a business.

Then you will be taxed at slab rates.

So you have to decide.
Are you OK with,
1. Your father paying taxes out of the interest you pay?
2. Declare your trading activity as a business?
3. Pay taxes at slab rate.

If yes, then you can deduct only the interest you pay for 6 lacs not the whole 1500rs.
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