5 Considerations Before Opting For The New Discard Option By The Income Tax Department

Filing your income tax return (ITR) is an annual task for taxpayers, and it's crucial to be aware of the necessary steps. As the number of filed tax returns increases, understanding the process becomes essential. Start by logging into your e-filing account on the income tax portal, choose the applicable tax return form, and provide the required information.

After filling out the form online, validate it, submit it, and generate the acknowledgment of filing, known as ITR V. But is this the final step? No, it's not. Verifying the uploaded ITR is a crucial stage in the e-filing process. Without verification, your return won't be considered 'filed,' making the post-filing step necessary to ensure the process is complete.

Verification can be done electronically through net banking, Aadhaar-registered mobile, Digital Signature Certificate, demat account, etc., or manually by sending the signed ITR V to the Central Processing Centre (CPC) in Bangalore. 

The verification should be completed within 30 days. If this timeline is not met, there is an option to file a condonation request, but the tax authorities have the discretion to decide whether to condone the delay or not.

To make the process smoother, tax authorities have introduced a feature that allows taxpayers to choose to 'discard' their Income Tax Return (ITR) before verifying it. 

What Does Discard ITR Option Mean?

The "Discard ITR" option allows you to discard a filed return (original, revised, or belated) that has not been verified yet. If you notice any mistakes or errors in your filed return, you can use this option to discard it and then file a fresh ITR. 

In the past, you had to go through a lengthier process – verify the uploaded return, file a revised return with details of the original return, and then verify the revised return. With the new discard feature, you can directly file a fresh return without verifying the initial ITR.

Timeline To Discard Income Tax Returns

You can discard ITRs filed for FY 2022-23 onwards until the specified time limit, which is 9 months from the end of the relevant tax year, i.e., December 31. For the tax year 2022-23, the deadline is December 31, 2023. 

Here are some caution points to consider:

1. This option is only for 'unverified' or 'pending for verification' ITRs.

2. You need to submit an online undertaking before discarding the ITR.

3. Discarding the ITR can be done multiple times, but once discarded, it cannot be reversed and is considered not filed.

4. If you manually verified your ITR and sent the signed ITR V to CPC, do not discard it while ITR V is in transit.

5. This option doesn't exempt you from the filing requirement. You still need to file a subsequent fresh return after discarding, as applicable.

6. If you discard your original ITR after the due date and file a fresh one later, penalties and consequences may apply, such as late filing fees, interest on late filing, restrictions on carry forward of losses, and no option for the new personal tax regime.

7. If you file the fresh ITR before the due date, no penal fee is applicable.

While this facility aims to simplify the filing process, it's important for taxpayers to exercise caution and follow the guidelines mentioned above.

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