The Income Tax Department on November 28, 2023, introduced a new feature called "Discard Return" to streamline the income tax filing process. This feature simplifies rectifications in tax returns by allowing taxpayers to discard their returns instead of filing revised ones in case of errors. However, this option effective for returns filed from April 1, 2023, is only available if the return hasn't been verified for the assessment year 2023-24.
The main difference from the previous model is that taxpayers can discard returns before verification, instead of filing a fresh one after verifying. However, if the return is discarded after the original due date - July 31, it is considered a belated return, inviting penalties. Here's the difference simplified:
What is the "Discard" ITR option?
Taxpayers must file their income details via 'return of income' if their income exceeds Rs 3 lakh. Previously, if an error was spotted after filing, the return could be revised up to three months before the assessment year's end or before the completion of the assessment, whichever is earlier. But if you want to submit a revised return, after an original return was filed, the original return needed verification even if an error was identified.
Now, the "Discard" feature, available on the Income Tax e-filing website (www.incometax.gov.in), allows taxpayers to permanently delete their filed tax returns without verifying them.
Says Vivek Jalan, Partner, Tax Connect Advisory, a multi-disciplinary tax consultancy firm," 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 where 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."
Jalan explains, "If a wrong income has been disclosed this year which should have been disclosed in the next year, then after verifying the return and then revising the ITR without this income head may lead to a scrutiny by tax department as to whether such income was subsequently suppressed and then ITR revised. However incase 'discard return' option is used, then such undue litigation can be avoided."
Once discarded, the I-T return is removed from the department's records, with no chance of retrieval by the taxpayer.
How To Discard ITR?
The discarding process is straightforward: log in to the e-filing portal, navigate to "Income Tax Return," and select "e-Verify ITR," where the option 'Discard' is available. However, filing a fresh return after discarding the original one post the due date (July 31) results in penalties as it's considered belated.
What To Do If You Have To Discard After Due Date?
"Users can avail the option of “Discard” for the ITRs being filed u/s 139(1) /139(4) / 139(5) if they do not want to verify it. The user is provided a facility to file an ITR afresh after discarding the previous unverified ITR. However, if the “ITR filed u/s 139(1)” is Discarded and the subsequent return is filed after the due date u/s 139(1), it would attract implications of belated return like 234F, etc., Thus, it is advised to check whether the due date for filing the return u/s 139(1) is available or not before discarding any previously filed return," Income Tax website says.
If you have to discard the Original ITR under section 139(1) after the due date, choose section 139(4) for filing a subsequent return.
In case you have sent your ITR verification to CPC and it has not been reached, the discard option can still not be exercised. "User shall not discard such returns, where the ITR-V has already been sent to Central Processing Centre (CPC). There is an undertaking to this effect before discarding the return," the Income tax website says.
There is no limit to using the discard option, as long as the "ITR status" remains "Unverified" or "Pending for verification."
