Discard Income Tax Return explained: The Income Tax Department, in an attempt to streamline the process of filing income tax returns further, has this year come up with a new feature called “Discard return”. As the name suggests, the new option allows an income tax payer to “discard” their IT return, instead of filing a revised one in case of any error.
However, there is a catch! You can only avail the “Discard” ITR option if you have not verified your income tax return for the assessment year 2023-24. Let’s understand this better:
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What is the “Discard” ITR option?
If you “discard” your tax return on the income tax return filing website, www.incometax.gov.in, it will be deleted from the records of the Income Tax Department forever and there is no way of retrieving it by the taxpayer.
The process of discarding your ITR is fairly straightforward: Go to the Income Tax website (www.incometax.gov.in), Login and go to the e-filing option. Under that select Income Tax Return and then e-verify ITR. Here you will get the option to discard your return.
This new option can only be exercised for Income Tax returns that have been filed on or after April 1, 2023. This means it is applicable for the financial year 2022-23 (Assessment year 2023-24). As pointed out above, you can only discard your IR return if it is not verified (e-verification or through post to the CPC). In case you have sent your ITR verification to CPC and it has not reached it, the discard option can still not be exercised.
Chander Talreja, Partner, Vialto Partners elaborates, “It’s a beneficial move for taxpayers – Online facility introduced to discard Income tax returns (not duly verified) filed for tax year 2022-23 onwards. You can discard such returns multiple times.”
Kuldip Kumar, Partner, Mainstay Tax Advisors welcomes the move stating, “It will benefit especially those taxpayers who, after submitting the return, realized an error or omission in the tax return. Instead of first e-verifying the tax return and then revising it, they can now simply “discard” the unverified tax return and file a fresh return.”
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How is Discard ITR different from Revised ITR?
Before the Income Tax Department introduced the Discard Income Tax Return option, a taxpayer had to verify the tax return after filing it, even if they realized that an error had been made. It is only after the verification of the ITR that one could go to the ITR portal to revise their tax return.
In case of discard ITR, the saved but not verified return, will be completely deleted from the Income Tax Department’s website. So, from a taxpayer’s perspective it would entail filing a fresh return. This will have implications if the new return is filed after the original due date of July 31 every year since it would be treated as a belated return.
For example, you file your income tax return on July 25, but do not verify it. You discard the return on August 10 and then file a new income tax return. This new return would be treated as a belated return and would invite penal consequences since it would be filed after the original due date of July 31. However if you have verified your ITR and then file a revised return after July 31, then no penal consequences are applicable.
Kuldip also cautions the taxpayers on the same. “Taxpayers should carefully evaluate the “discard” option, particularly where they filed the return in July and choose to “discard” the unverified return in August. This is so because the return once discarded is considered as if the return has never been filed and thus, the fresh filing (after the discard) will attract a late filing fee of Rs 5,000 and taxpayer will not be able to carry forward any losses incurred during the year,” he tells TOI.
Chander explains to TOI that a fresh return is to be filed post discarding, without a penal fee (being original return filed within the due date), else penal fee payable, being a belated return. “The option to discard any tax return (being unverified/ pending for verification) available only till the last date of filing it (for tax year 2022-23, its December 31, 2023),” he says.
Here are some Frequently Asked Questions (FAQs) about the Discarded I-T returns:
- Can my ITR filed for AY 2023-24 be discarded if not verified?Certainly! A user has the option to “Discard” ITR filed under sections 139(1), 139(4), or 139(5) if it is not verified. This feature enables users to file a fresh ITR after discarding the previous unverified one. However, discarding an “ITR filed u/s 139(1)” and subsequently filing a return after the due date under the same section might lead to implications such as penalties outlined in section 234F, considering it a belated return. Hence, it is advisable to confirm the availability of the due date for filing the return under section 139(1) before discarding any previously submitted return.
- Can an ITR discarded by mistake be retrieved?Unfortunately, once an ITR is discarded, it cannot be reversed. Exercise caution when opting for the discarding option. Discarding an ITR implies that the return has not been filed at all.
- Where can a user find the “Discard” option on ITR website?You just need to follow the path: www.incometax.gov.in → Login → e-File → Income Tax Return → e-Verify ITR → “Discard”
- If my unverified ITR has been discarded by me, is it compulsory for me to file an ITR?A user who previously uploaded return data but later chose to discard the unverified return is expected to file a subsequent ITR later. This action aligns with the user’s responsibility to file their income return based on their earlier activity.
- If my ITR V has not reached CPC yet, can I discard my return?You should refrain from discarding returns for which the ITR-V has already been dispatched to CPC. Prior to discarding the return, an undertaking affirming this decision is required.
- Can the “Discard” IT return option be used more than once?There’s no limitation on utilizing this option multiple times, provided the “ITR status” remains “Unverified” or “Pending for verification.”
- Can I avail the Discard ITR option for a previous assessment year (AY 2022-23)?A taxpayer can only avail this option from Assessment Year 2023-24 onwards for the corresponding ITR. This choice will remain accessible until the specified time limit for filing the ITR under sections 139(1), 139(4), or 139(5), which is currently the 31st of December of the respective Assessment Year.
- I filed my Original ITR on July 25, 2023 and discarded it on August 10, 2023. Which section should I file the return now on December 5, 2023?If a user discards the Original ITR filed under section 139(1) after its due date has passed, they must select 139(4) while filing a subsequent return. In the absence of a prior valid return, the date of the Original ITR or the Acknowledgement number for the Original ITR fields does not apply. Additionally, should the user wish to file a revised return later, they must provide the details of the “Original filing date” and “Acknowledgement number” from the valid ITR.
