Highlights
- Will your personal loan application be rejected if you don’t submit the ITR?
- Maybe not, if you are salaried! Self-employed can also get the loan subject to meeting certain conditions
Income Tax Return (ITR) is one of the income documents that lenders seek to approve a personal loan application. While for self-employed, an ITR is mandatory, to say the least. But for salaried, there are alternatives in the form of salary slips, Form 60, etc. So, if you are salaried and don’t have an ITR, you can submit any of its alternatives and apply for a personal loan successfully. In some instances like pre-approved personal loans, you won’t need to submit any of these documents. Let’s read more about the same.
Table of Contents
Eligibility for Pre-approved Personal Loans
These loans are given to individuals based on an existing relationship with the lender. In that case, you don’t have to submit your documents again as the concerned lender will have the same with it. You just need to accept the offer that you can find on your registered email address or while going through the SMS on your mobile number. You can log in to net banking or dial the phone banking numbers of the concerned lender to see whether you are eligible for pre-approved personal loans or not. These loans can be given based on the following –
- Running personal loans
- Running home loans
- Credit card repayment track
- Salary accounts
If you are repaying the loan EMIs on time, chances of a good credit score are on the higher side. The possibility of a good credit score also exists when you pay your credit card bills on time and utilize your credit limits wisely. Ensure you don’t utilize more than 30% of the credit limit. So, if your credit card comes with a credit limit of INR 80,000, make sure not to consume more than INR 24,000. Salary account holders can also get a personal loan without documentation. As salary accounts show the credit of salary and the expenses you make, lenders can evaluate a suitable loan offer for you.
Pre-approved personal loans can be disbursed instantly to your account the moment you give consent to the offer by responding to the concerned email or applying through net banking. Lenders can come with alluring interest rates on such loans.
Loan Against Fixed Deposits is an Option Too if the Lender Does Not Accept the Application without ITR
Loans are even granted against fixed deposits, but they don’t bear the name of personal loans. They are called secured loans as per the loan terminology. In case you default, the lender reserves all rights to seize your fixed deposit and recover the loan dues. The loan quantum will depend on the value of the fixed deposit. Lenders can disburse around 80%-90% of the FD value as a loan. The interest rate can be 1%-2% above the applicable rate of the fixed deposit.
Why Do Lenders Seek an ITR?
It’s because an ITR shows the details of income earned and tax deductions claimed in a particular financial year. For instance, you have to submit the ITR for the financial year 2019-20 till August 31, 2020. There are seven forms – ITR 1, ITR 2, ITR 3, ITR 4, ITR 5, ITR 6 and ITR 7.
A Detail on Several ITR Forms
| ITR Forms | Applicable to Whom and What |
|---|---|
| ITR-1 (SAHAJ) | Resident individuals earning less than INR 50 lakh from salary, pension, house property, any other sources |
| ITR-2 | Every income from ITR-1 greater than INR 50 lakh, capital gains, foreign income/foreign asset, more than one house property |
| ITR-3 | Every Income from ITR-2, business profession, as a partner in a firm, a presumptive income of less than INR 50 lakh |
| ITR-4 | Every income from ITR-1, presumptive income under - Salary/Pension Other sources One house property Total income is more than 50 Lakh |
| ITR-5 | The form pertains to firms, limited liability partnerships, an association of persons (AOPs), body of individuals (BOIs) |
| ITR-6 | Companies that don’t claim deduction under Section 11 of the Income Tax Act |
| ITR-7 | Persons/Companies under Section 139(4A) Section 139(4B) Section 139(4C) Section 139(4D) |
