Availing a personal loan is the most responsible and loving act that most salaried employees undertake. It might be to help their parents when they are going through tough times, helping them in farming activities, or even repairing their family home. All these loans are availed for noble purposes. However, the bitter reality of repaying these loans with heavy tax deductions makes life tougher for them.
Take the case of a salaried person earning ₹10,00,000 per annum. His monthly earning would be about ₹83,333. Now, his total tax liability under the new tax regime for FY 2024-25 is ₹62,500 per year, or ₹5,208 per month. His take-home salary now would be ₹78,125 per month after deducting tax.
Now think they have taken a personal loan of ₹15,00,000 for 5 years. The repayment amount is roughly ₹30,000 per month with interest. Now, with all the liabilities, they only have ₹48,125 remaining for rent, groceries, medicines, and so on.
For an employee struggling to support their family and service their financial obligations, the combination of taxes and large loan payments is a huge burden. The government should acknowledge this and work to alleviate some of the stress on such workers.
Some things that could help include:
- Taxable income reduced by the amount of the loan repayment
- Lower tax rates for people who have personal loans they are currently servicing
- Standard deductions increased for employees who are paying off loans.
These measures would enable employees to not only manage their finances better but also appreciate efforts in supporting families and contributing towards the economy. If the government implements such change, it is sure to reap the goodwill and love of tens of thousands of employees across the country. The government already extends some schemes and subsidies on crop loans and housing loans for certain industries. It’s very much feasible that such concessions or relief plans could be considered and initiated to promote personal loan issues also.
It is time for the government to think about the problems of employees carrying dual burdens of taxes and loans when the budget session is approaching. Thoughtful policy changes can go a long way in improving their financial stability and overall well-being.
Disclaimer: The information provided is for educational purposes only and does not constitute financial advice. We are not registered financial advisors. Please conduct your own research and consult a qualified advisor before making investment decisions. Any investment decisions you make based on this information are solely at your own risk.
Also read: Indian Markets on 17 Jan: A Mixed Session with Sensex Closing Lower
Published on: January 17, 2025 at 8.45 PM GMT.
As stated in Bhagavad Gita : (Bhagavad Gita 2.23)
नैनं छिन्दन्ति शस्त्राणि नैनं दहति पावकः।
The soul can never be cut to pieces by any weapon, nor burned by fire.
19th January is celebrated as World Snow Day!
