New Delhi, April 9 -- Personal loans are a widely used financial tool in India, offering quick access to funds for a range of purposes-be it education, healthcare, home construction, or even to repay other outstanding loans.

However, how these funds are treated under the Income Tax Act has always raised questions among borrowers. Many wonder whether personal loans are taxable and, if so, under what circumstances.

This write-up is dedicated to explaining this concept in detail. In brief: as per the Income Tax Act of 1961, personal loans are considered liabilities-borrowed funds that require repayment by the borrower. They are not classified as income and are, therefore, not subject to taxation.

According to income tax laws, only income ...