Learn When To Discard Your Income Tax Returns?

In an apparent attempt to improve compliance convenience, the income tax department has added the “discard income tax return (ITR)” tool to the income tax portal.

Income tax returns that have been filed but are pending verification can be deleted using the Discard ITR tool. Although most taxpayers e-verify their returns, there is still the option to physically submit the ITRV to CPC, which will take an extra thirty days to be verified.

Discard ITR

It’s important to remember that after an income tax return is filed and is awaiting verification, the taxpayer is not permitted to make any changes after the fact. Filing a revised return was the only option available in the past for editing an ITR that had been submitted.

Exclusive for unverified Income Tax Returns

What exactly does “discard ITR” mean, then? First of all, it seems like a helpful tool for taxpayers who might have erred when submitting the ITR form and realized it after it was sent. The ‘discard’ option gives users the freedom to remove an incorrect ITR, allowing them to complete and submit a completely new one. Remember, though, that the discard feature is limited to unverified ITRs, so think twice before using it. The trash button won’t be available if the taxpayer has finished the e-verification procedure; any necessary adjustments must be made through a revised return.

Even if the “discard ITR” button makes it easier to remove incorrect returns for a new submission, the new filing date must still coincide with the deadline given in the income tax regulations. If the return is filed after the deadline, it can be considered late and subject to fines and interest.

The taxpayer still needs to file a new return even after discarding the old one. The FAQs on the income tax portal highlight the need to file a follow-up ITR after discarding an unverified return.

An ITR cannot be retracted once it has been discarded. When selecting this option, taxpayers should proceed with caution because the income tax department wants a new ITR to be filed in place of the discarded one, as a discarded ITR is regarded as never having been filed.

Discard ITR

Limitation on verification-in-transit

If the taxpayer has chosen physical verification and transmitted the ITR V to CPC, but the ITRV has not yet been processed by CPC, then the discard option is not available while the ITR verification is in transit. This limitation is acknowledged through a pre-discarding agreement.

Read More: Penalties Possible for Misreported Income in Income Tax – Learn How to Prevent Them

The discard ITR feature was introduced for Assessment Year 2023–2024 and is applicable to all return types, including original, revised, and belated returns. Although it provides more flexibility, its limited use to unconfirmed returns alone might make it less useful. Concerns have been voiced by several tax experts who claim that the present tax regulations do not support this feature legally. Whether this function improves compliance or becomes a source of litigation is something that only time can tell.