Getting a personal loan can feel a bit like a treasure hunt. You know the gold’s there, but what documents are the actual map? When it comes to proving your income, particularly with Income Tax Returns (ITRs), many Indian borrowers wonder: is it one year, two, or even three? Let’s break it down in simple terms.

THE SHORT ANSWER? IT DEPENDS!

You’d think there’d be one straightforward rule for ITRs when applying for a personal loan, but that’s not quite the case. While proving your income is a must for any loan, the exact number of ITRs a bank wants can vary. It often comes down to who you are – are you a salaried employee or do you run your own business? – and which bank you’re approaching.

SALARIED FOLKS: USUALLY SIMPLER

If you work for a company and get a regular salary, things are generally a bit easier. Most banks are happy with your recent payslips and your Form 16, which is like an annual summary of your salary and tax deductions.

For example, a big player like SBI often just asks for your latest filed ITR (that’s one year’s worth) or your Form 16. In some cases, if your income falls below the tax-exempt limit, they might even waive the ITR requirement. It’s about showing you have a steady income.

SELF-EMPLOYED? BE PREPARED FOR A BIT MORE

Now, if you’re your own boss, running a business or working as a freelancer, banks need a clearer picture of your financial stability. For self-employed individuals, ITRs have become really important. They help the bank understand your income history, how healthy your business is, and ultimately, your ability to repay the loan.

Most banks will typically ask for your ITRs from the past two financial years. Sometimes, they might also ask for audited accounts alongside those ITRs, just to get a fuller view of your business’s financial performance. This is because your income might not be as regular as a salaried person’s, so they need to see a pattern of earnings.

WHY THE DIFFERENT RULES?

Banks need to be sure you can pay back the money you borrow. For salaried individuals, a regular pay cheque and Form 16 usually provide enough assurance.

However, for self-employed individuals, ITRs over several years give a more consistent and reliable picture of earnings and financial health, which can fluctuate more.

So, while the ITR requirements aren’t a strict “one size fits all,” understanding your employment type and doing a quick check with your chosen bank will make your personal loan application much smoother.