ITR filing: How long one should keep income tax return documents?

ITR filing: Filing income tax return (ITR) is one of the most important responsibilities of an earning individual. However, keeping one's income tax return-related documents is also important to answer any query of the income tax department in future and avoid action under the Black Money Act 2015. 

Under the Black Money Act, there is no specific time frame mentioned for a taxpayer to keep one's ITR documents. But, in case of income escaping assessment, the income tax department can issue notice under Section 147 of the income tax act on up to 10 years period.

On how long an income taxpayer should keep one's ITR documents, Mumbai-based tax and investment expert Balwant Jain said, "Under the Black Money Act, there is no specific time mentioned for which a taxpayer should keep one's ITR documents. However, the income tax department has power to send notice under income escaping assessment and this notice can be send for up to 10 years of ITR filing."

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Speaking on income escaping assessment and Black Money Act rules, Aarti Raote, Partner at Deloitte India said, "A tax payer has to retain his tax records for a minimum of 10 years. Generally an intimation for tax return processing would be received within a couple of months from filing the tax return where any prima facie adjustments are done. However a notice for detailed assessment can normally expect at anytime within a period of three months from the end of the financial year in which the tax return is furnished. However for income escaping assessment a notice could be sent before the expiry of 3 years of the relevant assessment year and in cases where the income escaping assessment is ₹50 lakhs or more, the notice could be issued up to a period of 10 years."

The Deloitte India expert advised taxpayers to keep one's ITR documents for at least 10 years, so that they can answer the notice with proper documents in case of any income escaping assessment query by the income tax department.

One needs to note that under the Black Money Act there is no time limit specified for initiation of proceedings. Thus while it may be difficult to maintain tax documents for a long time, it is in the interest of the tax payer to retain documents at least in soft copy to enable him to respond to the tax officer’s notice.