Loan Approval: How Filing ITR with Bharat Tax Services Helps

When applying for loans, having your Income Tax Returns (ITR) filed correctly can significantly impact your approval chances. Here’s a detailed explanation, complete with relevant Income Tax sections, of how ITR filing with Bharat Tax Services can facilitate your loan approval process.

Why ITR Filing is Important for Loan Approval

  1. Proof of Income:

    • Verification of Earnings: ITR serves as documented proof of your earnings, showing your total income and sources of income. Lenders rely on these documents to verify your ability to repay the loan.
    • Consistency in Income: Regular ITR filings demonstrate consistent income, which is crucial for lenders to assess your financial stability.

  2. Assessment of Financial Health:

    • Comprehensive Financial Picture: ITRs provide a comprehensive view of your financial health, including details about your income, investments, and deductions.
    • Debt-to-Income Ratio: Lenders use the information from your ITR to calculate your debt-to-income ratio, an essential factor in determining your loan eligibility.

  3. Legal Requirement:

    • Mandatory for High-Value Loans: For high-value loans, such as home loans or business loans, many banks and financial institutions require ITR documents for the past few years.
    • Compliance with Regulatory Norms: Submitting ITRs shows that you comply with the tax regulations of your country, adding to your credibility as a borrower.

  4. Creditworthiness:

    • Enhanced Credit Profile: Filing ITRs regularly and on time enhances your credit profile, making you a more trustworthy candidate for loans.
    • Favorable Interest Rates: A good credit profile backed by ITRs can help you negotiate better interest rates and loan terms.

How ITR Filing Helps in Loan Approval

  1. Proof of Income:

    • Salaried Individuals: For salaried individuals, ITRs confirm the salary received and any additional income sources, such as investments or freelance work.
    • Self-Employed Professionals: For self-employed professionals and business owners, ITRs are critical in showing business income and financial stability over the years.

  2. Eligibility for Larger Loans:

    • Higher Loan Amounts: Consistently filed ITRs can justify your request for higher loan amounts by proving a higher income bracket.
    • Longer Loan Tenure: Detailed income proofs through ITRs can also help in getting approval for longer loan tenures.

  3. Example Scenarios:

    Scenario 1: Personal Loan

    • Applicant: Ms. Ritu, a salaried employee with an annual income of ₹6,00,000, wants a personal loan of ₹3,00,000.
    • ITR Requirement: The bank requires ITRs for the last two years.
    • Outcome: Ms. Ritu’s consistent ITR filings showing her annual income ensure her loan is approved quickly, as the bank is assured of her repayment capacity.

    Scenario 2: Home Loan

    • Applicant: Mr. Sharma, a self-employed professional with an annual income of ₹15,00,000, applies for a home loan of ₹50,00,000.
    • ITR Requirement: The bank requests ITRs for the last three years.
    • Outcome: Mr. Sharma’s ITRs demonstrate his consistent and sufficient income, leading to the approval of his home loan with favorable terms.

Relevant Income Tax Sections

  1. Section 80C: This section allows for deductions on various investments and expenses such as life insurance premiums, employee provident fund, and housing loan principal repayments. Properly claiming deductions under Section 80C can lower your taxable income, thereby improving your debt-to-income ratio, which is crucial for loan approvals.

  2. Section 80D: This section provides deductions for premiums paid for health insurance policies. By claiming deductions under Section 80D, you can reduce your taxable income, showing a better financial position for loan eligibility.

  3. Section 24(b): Interest on home loans can be claimed as a deduction under this section. Demonstrating that you have availed of such benefits can strengthen your financial profile and improve your chances of getting additional loans.

  4. Section 10(14): This section allows exemptions for specific allowances such as travel, house rent, and conveyance. Properly reporting these exemptions can help in presenting a clearer financial picture, which is beneficial during loan assessments.

Bharat Tax Services: Your Partner in ITR Filing

At Bharat Tax Services, we help you maintain accurate and timely ITR records, making your loan application process smoother and more successful.

  1. Expert Guidance: Our experts guide you through the ITR filing process, ensuring all income sources and deductions are accurately reported.
  2. Accurate Documentation: We provide you with the correctly filed ITR documents required for loan applications.
  3. Comprehensive Support: We offer support in understanding and meeting the financial documentation requirements for various loans.

Contact Us

For more information or to get started with your ITR filing, connect with us:

Let Bharat Tax Services handle your ITR filing, ensuring a smooth, accurate, and beneficial experience. Contact us today!

× Hi