Save Your Old Tax Filing Records for Future Reference
Even after you have filed your income tax returns, you must keep your records with you for 6-10 years
When you file income tax returns, you eventually wind up with a stack of old documents retained as supporting evidence for these reports. All papers that substantiate the claims made by you in your tax return, such as rent receipts or rental agreements, Section 80C tax-saving paperwork, and so on, should be kept safe until you have submitted your ITR for a specific financial year.
You should bear in mind that the IRS does not need you to produce any documented proof to corroborate the claim you made when completing your ITR. Although the ITR is submitted based on self-assessment, the income tax department has the power to issue you a notice asking you to justify the claims in the ITR.
What is tax return filing?
According to the Income Tax Act of 1961, everybody whose total yearly income above a specific threshold is obligated to pay income tax. Tax filing is the process of calculating a tax due, creating a tax return, and submitting the completed return to the Internal Revenue Service. Any individual, Hindu Undivided Family (HUF), company, the body of persons, association of persons, or other entity that made a profit in the preceding fiscal year must file a tax return.
How long should you retain your tax returns?
It is recommended that you maintain your income tax return records for at least 7 years after filing. What is the reason behind this? You must retain your records for the long term, even if you have followed the proper procedures and submitted your taxes appropriately. This is because you will need your documentation on hand if the Income Tax Department issues an inquiry or initiates an inquiry into your previous returns.
The income tax department has the authority to send a notification to taxpayers for seven years after the fiscal year ends. This means that if you submitted an ITR for the fiscal year 2019-20, you must retain the supporting documentation with you until the end of the fiscal year 2026-27. The income tax department does have the authority to request data from previous cases dating back up to ten years; however, this only applies in instances where the department has evidence against you, but it can only be done in search cases.
Various types of taxpayers are covered under the seven-year term. Whether you are salaried, self-employed, or a specialist, the time frame for preserving records for seven years from the end of the relevant financial year would be the same.
ITR e-Filing System
With the advent of the e-filing system, income tax filing has become easier and more straightforward. You can file your returns online using the e-filing system. This cuts down on paperwork that isn't essential. Furthermore, the Internal Revenue Service communicates with you online, and you receive all essential papers as soft copies, which you may save on your computer, online storage, or email and keep secure and accessible.
Save a copy of your Income Tax Returns once you've submitted them. Try to ensure you archive your papers if you haven't already. You never know when you'll require their services again.