Tax Deduction on business loan

Does interst on loan for business get tax deduction even when the loan is from a friend in the form of a promissory note/loan agreement? Is loan for business purpose still considered 'business loan' if the lender is an individual?

Replies (6)
Quick Summary
This discussion clarifies whether interest paid on a business loan, even if borrowed from a friend via a promissory note or loan agreement, is tax deductible. The consensus is that while it's not a deduction under Chapter VIA, the interest can be treated as an allowable business expense, provided proper documentation exists. There's a note that for firms, the interest rate must not exceed specified limits.

Yes. Interest on business loan from a friend would be deductible. But if your nature of entity is a firm then interest rate applicable cannot exceed certain specified limit.

Agreed with Deepa
Deductible means, u/s VIA.
The answer is not, Only Housing loans & Education loans get deductions.

But for a treat as an expense, it's for business purpose, it's allowed, with valid documents.
No deduction under chapter VIA , not available .

I would like to clarify that with the usage of word "deductible" in my reply, I meant an allowable expense not Chapter VIA deduction.

You are right, Deepa Ji, Allowable as an expense, taken for business.

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
06 October 2026
Assistant Manager - Audit and Compliance

Ravi K Jain & Co

Noida

Others

View Details
Company
ARTICLESHIP 07 October 2026
Article Trainee/ CMA Trainee

RMA And Associates LLP

New Delhi

CA Inter

View Details
Company
12 October 2026
Chartered Accountant - Internal Audit

HKC | Chartered Accountants & Business Advisors

Ludhiana

CA

View Details
Company
19 October 2026
Accountants/Articles (Freshers/Experienced)

ADY & CO.

New Delhi

Graduate (Any)

View Details
Company
08 October 2026
Accounts and Tax Associate

POOJA R TELI & CO

Pune

CA Inter

View Details
Company
ARTICLESHIP 28 September 2026
Junior Accountant

J S P M & Associates LLP

Pune

B.Com

View Details
Company
30 September 2026
Senior Accountant

Codeboard Technology

Chennai

B.Com

View Details
Company
14 October 2026
Asst. Manager/Dy Manager (Costing)

manufacturing

Pune

CMA

View Details