I never filed ITRs but now have to show for home loan application. What to do

I have never filed my income tax returns. I have to show two years ITR for my home loan application. What should I do now?

Though you have never filed your income tax return, you can file your income tax return only latest one year i.e. financial year 2021-2022 till 31st December 2022 with late fee. The mandatory late filing fee is Rs. 1,000/- if the taxable income exceeds the basic exemption limit of Rs. 2.50 lakhs but does not exceed 5 lakhs. In case the taxable income exceeds 5 lakhs the late filing fee would be higher at Rs. 5,000/-.

Though you cannot file normal ITR for more than one year at a time but you can file an updated ITR for the financial year 2019-20 and 2020-21 if you satisfy the prescribed conditions. Filing an updated ITR comes with cost. You will have to pay an additional 25% of the tax and interest in respect of ITR for financial year 2020-2021 and 50% for the ITR for financial year 2019-2020. 

Please note that the lenders look at the delayed ITRs with suspicion. However, in case  substantial amount of tax had already been deducted or paid as advance tax, or your source of income is salary, then the lenders may not take negative inference for such delayed filing of income tax returns. If you have are and proper tax has been deducted from your salary in the past, in my opinion the lender will not insist for an ITR and either form 16 or salary slips should be sufficient for this purpose as the lender is concerned only with your ability to timely service the home loan and not whether you have filed your ITR or not. 

Balwant Jain is a tax and investment expert and can be reached on [email protected] [email protected] on Twitter

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