Filing an income tax return (ITR) is an annual compliance obligation of the taxpayers. With the increase in the number of tax returns being filed, awareness regarding the steps to be followed by them to complete the ITRfiling process is a must. To start with, you login to your e-filing account on the income tax portal, select the applicable tax return form and provide the required information.Post validating the online filled form, you will submit it and the ITR will be uploaded and an acknowledgement of filing – ITR V is generated. But is this the last step of the process? The answer is NO. An important stage of the e-filing process is verification of the uploaded ITR. Without verifying, your return will not be construed as ‘filed’ and hence, the post filing step is a prerequisite to ensure completeness of the filing process.
The verification can either be done electronically vis-à-vis net banking, Aadhaar registered mobile, Digital Signature Certificate, demat account etc. or manually by sending signed ITR V to the Central Processing Centre (CPC), Bangalore. The timeline of verifying is within 30 days. There is an option to file a condonation request if the said 30 days timeline is not met but the tax authorities have discretion to condone such delay or not.
Now, to further streamline the process, the tax authorities introduced a facility wherein the taxpayer can opt to ‘discard’ the ITR before verifying it. Let’s analyze the same in detail.
What is the “discard ITR” option?
If you have filed your return, be it original, revised, or belated which is not yet verified, you can avail the facility to discard the same and subsequently file a fresh ITR after discarding the unverified one. This may happen where you identify any mistake/ error in your ITR post filing. Prior to this facility, the taxpayer would have to first verify the uploaded return, then file a revised return incorporating the details of the original return like acknowledgement number, date of filing etc. and then verify the revised return to complete the entire process. Now, with this facility, a fresh return can directly be filed without verifying the first ITR.
The verification can either be done electronically vis-à-vis net banking, Aadhaar registered mobile, Digital Signature Certificate, demat account etc. or manually by sending signed ITR V to the Central Processing Centre (CPC), Bangalore. The timeline of verifying is within 30 days. There is an option to file a condonation request if the said 30 days timeline is not met but the tax authorities have discretion to condone such delay or not.
Now, to further streamline the process, the tax authorities introduced a facility wherein the taxpayer can opt to ‘discard’ the ITR before verifying it. Let’s analyze the same in detail.
What is the “discard ITR” option?
If you have filed your return, be it original, revised, or belated which is not yet verified, you can avail the facility to discard the same and subsequently file a fresh ITR after discarding the unverified one. This may happen where you identify any mistake/ error in your ITR post filing. Prior to this facility, the taxpayer would have to first verify the uploaded return, then file a revised return incorporating the details of the original return like acknowledgement number, date of filing etc. and then verify the revised return to complete the entire process. Now, with this facility, a fresh return can directly be filed without verifying the first ITR.
Timeline to discard IT return?
You can opt to discard ITRs filed for FY 2022-23 onwards. However, this option will be available only till the time limit specified for filing the ITR which is 9 months from the end of the relevant tax year i.e., December 31. For the tax year 2022-23, it is 31st December 2023.
Are there any caution points?
Yes, before you opt for this option, do take care of the below points:
- Option available only for ‘unverified’ or ‘pending for verification’ ITRs. An online undertaking to this effect needs to be submitted before discarding the ITR.
- You can discard the ITR multiple times. Once it is discarded, it cannot be reversed and is deemed to be not filed.
- If you manually verify your ITR and have already sent out the signed ITR V to CPC, you should not discard the ITR given ITR V is in transit.
- It is not a facility to relieve you from filing requirement. You are still required to file a subsequent fresh return after discard, as applicable to your case.
- Assuming you filed your original ITR (say on 20th July 2023) and discarded it before verifying it. You filed a fresh ITR after the due date (say on 10th August 2023). In such a case, penal fee of Rs. 5,000/ Rs. 1,000 as applicable along with other consequences will come into play such as interest on late filing, restrictions on carry forward of losses (except house property loss), no option to opt for new personal tax regime etc. Where fresh ITR was filed (say on 30th July 2023), then no penal fee.
This facility aims towards streamlining the process of filing the returns and avoiding unnecessary revisions. Although it is a simple click facility and user-friendly, taxpayers should exercise caution and adhere to the points above.
(Chander Talreja is Partner at Vialto Partners. Manavi Gupta, Director, Vialto Partners also contributed to the article. Views are personal)