While applying for a home loan, it is important to know which documents are required and why. These documents help the lender in checking your eligibility and creditworthiness. While applying for a home loan, you need to submit identity proof, address proof, property documents and income documents. Income Tax Return is one of the vital documents required for home loan. However, it could be tricky to file ITR if you are not accustomed to it.


What is ITR?

ITR or Income Tax Return is a mandatory form to be filed by individuals and businesses whose income is above the threshold limit. However, experts opine that it is a good practice to file an Income Tax Return even if the income is below the threshold limit. ITR indicates your taxable income and includes all the information of your income earned through house property, business, interest, sale of properties, etc. in a particular financial year.


Why is ITR necessary?


There are various reasons why lenders ask for ITR. ITR helps ascertain your income and cash flow. ITR is necessary as -


  • It is an indicator of your financial stability

Through an ITR, the lender is able to determine your financial capability. You are required to submit ITR for the last three years for a home loan. It helps the lender ascertain whether you have a stable source of income and if you would be able to pay Equated Monthly Instalments (EMIs) in a timely manner.


  • It reflects your repayment capacity

With ITR, lenders determine your repayment capacity and credibility. If you have defaulted in ITR filing, they might assume that you would default in home loan EMI payments as well.


How to file ITR?

If you are an individual with income less than Rs. 50,00,000, you would need to file ITR-1 also known as Sahaj Form-

  • Visit the official website at ‘incometaxindia.gov.in' and use the e-filing portal for ITR filing
  • Fill in your personal details like name, Aadhaar, address, etc.
  • Enter your income under respective heads like salaries, income from other sources like fixed deposits or other investments. You can check the salary figure from your Form 16.
  • The Gross Total Income is computed by adding the income earned from all the sources
  • Enter deductions applicable under the Income Tax Act, 1961. You are also eligible for tax deductions on home loan repayment of principal and interest
  • The total deduction is subtracted from the Gross Total Income to arrive at total income. Your taxes will be determined based on this total income
  • Enter your bank details
  • Make the required payment if there is tax liability/additional tax liability other than the Tax Deducted at Source by your employer


You must furnish your Income Tax Returns when you apply for home loan. Without ITR, your home loan application might not be approved. If you face difficulty in filling it yourself, you can take the assistance of a professional to ensure that it is filed accurately.

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Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.