You’ve probably heard of the Income Tax Return (ITR) as something you do every year to pay your taxes. But did you know it’s not just about taxes? It’s actually super important if you want to get a loan from a bank. This article is all about how your tax papers and getting a loan from a bank are connected. We’ll talk about why banks care so much about your tax papers and how they affect whether you get a loan or not.

Loan Eligibility:

Banks use income tax returns as a primary tool to assess the borrower’s eligibility for different types of loans. Most of the Banks demand atleast last 3 year’s ITR documents. The information contained in the returns helps determine the maximum loan amount that can be sanctioned based on the applicant’s income and repayment capacity.

Your Payslips and Bank statements may give the information to Banks but ITR is the only document that gives information about all sources of income, which banks evaluate to decide the loan eligibility.

Interest Rates:

Creditworthiness, evaluated through income tax returns and CIBIL score, so your ITR influences the interest rates offered by banks. Borrowers who has not filed ITR possibly have to pay Higher Interest than the borrowers who filed ITR .

Loan Terms:

The details furnished in income tax returns play a pivotal role in shaping loan terms such as tenure and amount. Higher incomes and consistent returns may lead to longer tenures and larger loan amounts, providing borrowers with greater flexibility in repayment.

Speeding Up the Process:

If you provide all the right tax documents, it can make the loan process faster. Banks can quickly check your finances and decide whether to approve your loan.