BAJAJ FINSERV DIRECT LIMITED
Housing Insight

Is It Mandatory to File ITR to Get a Home Loan in India

authour img
Aakash Jain

Table of Contents

Many people lose out on home loans simply because they don't understand how important an Income Tax Return (ITR) is. Banks use it to check if you can repay. If you haven’t filed one, your chances may drop or you might face delays. But not everyone needs to file an ITR—and not every bank has the same rules. Knowing when it matters and what to submit instead can make all the difference. If you're unsure whether ITR is required for a home loan, missing this could cost your approval or lower the amount you can borrow.

What Is an ITR and Why Do Banks Ask for It

An Income Tax Return (ITR) is a document you file with the Income Tax Department each year. It shows your total income, tax paid, and sources of earnings. For banks, this form acts as solid proof that your income is genuine and declared. It helps them assess if you can repay a home loan without delays.

Lenders also use your ITR to understand how steady your income is over time. This becomes even more important if you're self-employed or have income that changes from month to month. Filing regular ITRs builds trust and increases your chances of loan approval.

Is ITR Mandatory for All Types of Borrowers

Whether you need to file an ITR depends on how you earn and your total income. But when it comes to filling ITR for a home loan, lenders often expect it even if it’s not legally required. Here's what you need to know:

Salaried Borrowers

If you're salaried, banks usually ask for salary slips and Form 16. You may not need an ITR if your income is below the taxable limit, but many lenders still prefer it—especially if your pay includes bonuses or variable components. However, filing ITR for a home loan may still improve your eligibility.

Self-employed Applicants

For self-employed individuals, filing and submitting ITRs is essential. Since you don’t receive fixed salaries, lenders rely on your ITR to verify income and check repayment ability.

Exemptions from Filing

You may not need to file an ITR if:

  • You are 75 or older and earn only pension and interest from the same bank

  • You’ve submitted a declaration and the bank deducts TDS under Section 194P

  • Your income is below the basic exemption limit

Even if exempt, submitting ITR can improve your loan eligibility and help build financial trust with lenders.

How Many Years of ITR Are Required

Banks use your ITR to check how stable your income is and whether you can repay the loan on time. Most lenders require ITRs from the past three financial years. Here's why this matters:

Proof of Consistent Income

Lenders review ITRs to confirm that you earn regularly and legally. A consistent ITR record over three or more years shows that your income is not one-off or seasonal.

Assessment of Repayment Ability

Your ITR helps banks judge if you can manage monthly EMIs without delays. If you’ve filed ITRs on time, it shows financial discipline and builds trust.

Stronger Profile for New Earners

If you’ve just started working or had breaks in your income, your ITR history plays a bigger role. Filing regularly helps create a stable financial profile.

Better Loan Terms and Approval Speed

A strong ITR track record can lead to quicker approvals, higher loan amounts, and better interest rates. It shows that you take your financial responsibilities seriously.

Home Loan Eligibility: Salaried vs Self-Employed Applicants

Here is a clear comparison between home loan eligibility for salaried and self-employed applicants to help you understand what lenders look for:

Eligibility Criteria

Salaried Applicants

Self-Employed Applicants

Income Proof

Salary slips (last 3–6 months), Form 16, employment letter

ITRs (last 3 years), profit & loss statement, balance sheet

ITR Requirement

May not be mandatory if income is below the taxable limit

Mandatory for income verification and loan eligibility

Income Stability Check

Based on regular monthly salary credits

Based on business income trends and profit consistency

Loan Processing Time

Usually faster due to clear, fixed income documents

May take longer due to detailed financial checks

Loan Amount Eligibility

Based on fixed income and tenure of employment

Based on average profits, business health, and ITR declarations

Additional Documents

Bank statements, ID/address proof, property documents

Business registration, GST filings, CA-certified financials

A salaried profile often has quicker processing, but self-employed applicants with strong ITR records can also get competitive home loan terms. Make sure your documents are up to date for a smoother process. This clarifies the home loan ITR requirement for different profiles.

Alternatives to ITR for Proving Income

If you haven’t filed an ITR, you’ll need strong supporting documents to prove income and creditworthiness. Here are the key alternatives banks may consider:

  • You must provide clear income proof such as salary slips, bank statements, or CA-certified business income statements

  • Form 16 from your employer can support your income claim if tax has been deducted at source

  • Regular salary credits in your bank account help lenders assess your financial discipline and earning pattern

  • A valid employment contract or offer letter confirms your job role, employer, and expected income

  • Self-employed applicants can submit CA-certified profit and loss statements in place of an ITR

  • A strong credit score between 750 and 900 is essential to show repayment ability and build trust with the lender

  • Banks also check your repayment history, outstanding loans, and credit utilisation from your credit report

  • Even if ITR is not mandatory, reliable income proof and a good credit score are crucial for home loan without ITR approval

How ITR Strengthens Your Home Loan Application

Filing regular ITRs not only fulfils your tax obligation but also plays a key role in improving your chances of getting a home loan. Here's how it helps:

Builds Your Financial Credibility

An ITR reflects that your income is legal, declared, and consistent, which increases trust with lenders reviewing your home loan application.

Supports Your Credit Profile

When combined with a strong credit score, your ITR acts as additional proof that you manage your finances well and pay dues on time.

Provides Verified Income Records

Unlike salary slips or bank entries, ITRs are government-verified and offer a clearer picture of your yearly income and deductions.

Helps Assess EMI Affordability

Lenders use ITR details to calculate whether you can handle monthly EMIs based on your net income and existing financial obligations.

Enables Higher Loan Eligibility

With a higher declared income in your ITR, banks may approve a larger loan amount or offer more flexible repayment terms.

Speeds Up Loan Processing

Applicants with complete and recent ITRs often face fewer delays, as the documentation reduces the need for extra verification.

Improves Negotiating Power

A well-documented financial history, including the ITR for housing loan, gives you better chances to negotiate interest rates and loan terms with the bank.

Can You Get a Home Loan Without Filing an ITR

It is possible to get a home loan without ITR, but banks will look for other strong indicators of financial stability. Here’s how you can improve your chances:

Choose a Smaller Loan Amount

Requesting a lower loan amount reduces the lender’s risk and makes it easier to qualify for a home loan without an ITR.

Add a Co-applicant With Financial Stability

Applying with a co-applicant who has a strong income and files ITRs regularly can improve your eligibility and increase approval chances.

Use Your Existing Bank Relationship

Banks where you hold accounts, savings, or fixed deposits may be more willing to consider your application based on your financial behaviour.

Explore Loans Under Special Programmes

Some banks offer tailored home loan schemes for low-income earners or informal workers where ITRs may not be strictly required.

Submit Reliable Alternative Income Proof

You’ll need to provide other valid documents like salary slips, Form 16, employment letters, or CA-certified income statements.

Maintain a Strong Credit Score

A credit score above 750 is essential when applying without an ITR, as it reassures lenders of your ability to repay.

While the answer to ‘Can you get a home loan without ITR?’ is yes, filing regular ITRs still gives you stronger eligibility, better terms, and faster approval.

Consequences of Not Submitting an ITR With Your Loan Application

Here are the key consequences you face if you fail to file your ITR on time:

Penalty Charges

Filing your ITR late triggers a penalty under Section 234F, usually Rs 5,000 or Rs 1,000 if your income is below Rs 5 lakh. No penalty applies if your income is below the basic exemption limit.

No Carry Forward of Losses

Late filing means you lose the right to carry forward losses to offset future income, increasing your tax liability. However, losses from house property can still be carried forward.

Interest on Tax Amount

You must pay 1% monthly interest on unpaid tax from the due date until payment under Section 234A. This increases your total tax burden the longer you delay.

Prosecution for Failing to File ITR

If your tax liability exceeds Rs 25,000, non-filing can lead to imprisonment from six months to seven years plus a fine. For lower liabilities, imprisonment ranges from three months to two years with a fine.

Consequences of Not Submitting an ITR With Your Loan Application

Banks may reject or delay your loan without your ITR and might offer smaller amounts or higher interest rates. Knowing these consequences can help you prepare better before applying.

Case Scenarios: When ITR Is and Isn’t Required

Here are real-life examples to help you understand when filing an ITR is necessary or optional:

Salaried Below Taxable Limit

If your income is below the taxable threshold, you may not need to file an ITR, provided you have strong salary slips as proof.

Self-employed Business Owner

You must file ITRs for the last two to three years to verify your income and business stability.

Freelancer With Variable Income

Filing an ITR helps show consistent earnings despite irregular payments, increasing your credibility.

Recently Joined Job

You might not have an ITR yet but can submit an offer letter and recent salary slips to prove income.

When Filing ITR Is Mandatory Even If Income Is Below Tax-Free Limit

The Income Tax Department requires you to file ITR if:

  • Your business turnover exceeds Rs 60 lakh in the previous year

  • Your professional gross receipts exceed Rs 10 lakh in the previous year

  • You have tax deducted at source beyond a certain threshold

Understanding these cases helps you meet legal requirements and support your loan application effectively.

Documents to Submit Along With Your ITR for a Home Loan

Lenders need a complete picture of your finances. Apart from your ITR, you must submit other key documents. Here are the most common documents to submit along with your ITR for a home loan:

  • PAN card and Aadhaar card as identity and tax proof

  • Address proof such as utility bills, passport, or rental agreement

  • Identity proof like voter ID, driving licence, or passport

  • Recent salary slips and Form 16 for salaried applicants

  • Business registration, ITR copies, and profit & loss statements for self-employed applicants

  • Bank statements for the last six months showing regular income

  • Property documents including sale agreement, title deed, and approved building plan

  • Completed and signed loan application form

  • Additional documents such as photographs, employment proof, or no-objection certificates if requested

Submitting these documents with your ITR helps lenders verify your financial profile and speeds up loan processing.

Conclusion

While it is not always legally required, most banks expect you to file your ITR before giving you a home loan. It proves your income and builds trust. If you’re self-employed, filing ITR is usually a must. Even if you're salaried, it improves your eligibility and can help you get better terms. Skipping it can reduce your chances or lead to delays. So, even if you're wondering “Is it mandatory to file ITR to get a home loan in India”, it’s wise to file it anyway and stay on the safer side.

FAQs on on Is It Mandatory to File ITR to Get a Home Loan in India

Why is filing an ITR important when applying for a home loan?

Filing an Income Tax Return (ITR) is crucial because it proves your income is legal, consistent, and taxable. Lenders use ITRs to assess your financial stability and repayment capacity. Regular ITR filings strengthen your credit profile and increase your chances of loan approval with better terms.

Most lenders request ITRs for the past two to three financial years. This timeframe helps them verify your income consistency and growth, especially for self-employed applicants. A steady ITR history indicates reliable earnings, which improves your home loan eligibility.

Yes, salaried individuals whose income falls below the taxable limit can apply without an ITR. However, they must provide alternative income proofs such as salary slips, Form 16, and bank statements. Lenders may apply stricter scrutiny or offer smaller loan amounts in such cases.

Yes, if you haven’t filed an ITR, banks may accept salary slips, Form 16, bank statements showing regular income, employment contracts, or CA-certified income statements for self-employed borrowers. These documents help lenders verify your income but usually carry less weight than ITRs.

A higher declared income in your ITR generally improves your loan eligibility because it shows a stronger repayment capacity. Lenders consider your income to decide the loan amount and interest rates, so accurate and higher income declarations can help secure better loan terms.

View More
Author Image
Hi! I’m Aakash Jain
Blogger

Aakash is a seasoned marketing and finance professional with over five years of experience. With a unique blend of financial expertise and creative flair, he excels in crafting succinct, user-friendly content that empowers readers to make well-informed choices. Specialising in articles, blogs, and website pages for loan products, Aakash is dedicated to simplifying complex concepts and delivering valuable insights that resonate with diverse audiences.

Academy by Bajaj Markets

alt 11998

All Things Tax

Navigate the tax maze with ease! Uncover Income Tax 101, demystify jargon with Terms for Beginners, and choose between Old or New Regimes.

Seasons 6
Episodes 25
Durations 1.3 Hrs
alt 7908

All Things Credit

Unlock the world of credit! From picking the perfect card to savvy loan management, navigate wisely.

Seasons 12
Episodes 56
Durations 3.0 Hrs
alt 1886

Money Management and Financial Planning

Money Management and Financial Planning covers personal finance basics, setting goals, budgeting...

Seasons 5
Episodes 19
Durations 1.1 Hrs
alt 2490

The Universe of Investments

Explore the investment cosmos! From beginner's guides to sharp-witted strategies, explore India's treasure trove of options.

Seasons 5
Episodes 23
Durations 1.5 Hrs
alt 224

Insurance Handbook

Discover essential insights on various types of insurance in India.

Seasons 2
Episodes 6
Durations 0.5 Hrs
alt 1397

Tech in Finance

Welcome to Tech in Finance, where we explore the exciting intersection of technology and finance...

Seasons 1
Episodes 5
Durations 0.3 Hrs
Home
Home
ONDC_BD_StealDeals
Steal Deals
Credit Score
Credit Score
Accounts
Accounts
Explore
Explore

Our Products