After filing your income tax return (ITR), it is essential to verify it within the specified timeframe, either online or offline. Unless the taxpayer verifies the return, it does not get processed. An unverified return is treated as equivalent to not filing a return at all.
Starting from assessment year 2023-24, there is a new option available. Taxpayers will have the option of discarding an unverified return if they find any discrepancies in it and wish to file a fresh return. Let's delve into the details of this new discard option.
What is the discard return option and its purpose?
After filing or uploading the ITR form on the income tax e-filing portal, the next step is to verify the return. However, with the new discard option, if you identify any errors before verification, you can delete the return and submit a fresh one.
Previously, once a return was filed, it had to be verified, even if mistakes or omissions were identified before a revised return with accurate information could be filed.
“Once a return is verified and filed and then revised, the trail remains and this trail may lead to a query from the income tax department. Hence, after submitting the ITR the taxpayer notices some errors or omissions, he can now use the discard ITR option. In this case, he does not have to compulsorily verify a wrong return and then revise it, exposing himself to the risk of a departmental query,” said Vivek Jalan, a partner at Tax Connect Advisory, a consultancy firm.
Jalan explained that earlier, if income from the following year was erroneously disclosed in the current year, then after verifying the return and then revising the ITR without this income head could have led to scrutiny by the tax department as to whether such income was suppressed and then ITR revised. However, in case the discard return option is used, then such undue litigation can be avoided.
Verification of ITR and stipulated time period
Verification of ITR is an important step. During verification, you declare that all the information provided in the return is accurate, complete, and in compliance with the income tax rules.
There are two ways to verify your filed ITR — e-verify the return online or send a physical copy of your duly signed ITR to the Centralised Processing Centre (CPC) in Bengaluru. It's important to note that the time limit for e-verification or submission of signed and verified ITR is 30 days from the date of ITR filing.
Failure to verify the ITR within the stipulated time results in the return being treated as not filed. This will incur all the consequences associated with not filing an ITR under the Income Tax Act, 1961.
What are the implications if the original return was filed within the due date but subsequently discarded to submit a fresh return after the due date?
If the return is submitted prior to the due date but subsequently discarded, and a fresh return is filed after the due date, “it would attract implications of belated return in the form of late fees,” said Yeeshu Sehgal, head of tax market at AKM Global, a tax and consulting firm. Sehgal explained that if a return with the due date of November 30 is filed on November 20 and discarded later and the new return is filed on December 2, late fees will apply. Besides the late fee, there are other limitations of belated returns as well.
When can you exercise the discard return option?
This option can be utilised only when the ITR status is "unverified" or "Pending for verification." There are no restrictions on using this option multiple times.
However, it is crucial not to discard returns in cases where the signed ITR-V (acknowledgement form) for physical verification of ITR has already been dispatched to the CPC. An undertaking to this effect is required before discarding the return.
How to use the discard return feature
The procedure for discarding a return mirrors the process for verifying the return.
1. Log in to www.incometax.gov.in.
2. Go to 'e-File' and choose the 'Income Tax Return' option.
3. Select 'e-Verify ITR,' and within this section, locate the 'Discard' button.
Other details of the discard return option
It's crucial to note that once a return is discarded, the action is irreversible. Therefore, before opting for the discard feature, it is advisable to conduct a thorough evaluation. When an ITR is discarded, it essentially means that the return has not been filed at all.
Additionally, it is important to bear in mind that if a return is discarded and no fresh return is filed, it may attract the attention of the tax department.
The Income Tax department clarified in its FAQ section that a user, who has previously uploaded return data but has utilised the option to discard the unverified return is expected to file a subsequent ITR later on. This expectation arises from the understanding that the user is liable to file the return of income based on their earlier actions.
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