How long do you have to keep your income tax related documents?
Income Tax Act does NOT specify any time period for which you have to keep these documents. There is absolutely no provision in the Income Tax Act which would suggest for how long the documents must be kept by the taxpayer. However as per Section 149 of the Income Tax Act, the time limit for issuing an income tax notice to an individual (I am interpretating this) as the time period for which documents must be kept.
As per section 149, the IT department has the powers to issue notice to taxpayers for seven years from the end of the financial year. So, this would mean that if you have filed ITR for FY 2017-18, then you must keep the related documents with you till the end of FY 2024-25.
The seven-year time period is applicable for various classes of taxpayers. The time limit for retaining documents for seven years from the end of relevant financial year is same for all classses of tax payers – salaried person, self-employed or a professional.
For those with income from Overseas assets
If have any sort of income from foreign assets, then you will have to keep the ITR related documents for longer. For any individual having income relating to a foreign asset or having a financial interest in any foreign entity, then, in that case, such related documents must be kept for 17 years from the end of the relevant financial year.
Should you keep it beyond 7 years?
Yes, it is strongly advisable to keep the documents for at least seven years, but, this does not mean that once the specified period is over, you should throw away the required documents. According to the amendment made in Budget 2017, applicable with effect from AY 2017-18 (April 1, 2017), income tax officers can now ask details up to 10-year-old cases that involves any amount of escaped income.
But the income tax department cannot ask tax-related details from just about anyone; it is meant for certain exceptional cases only. Income tax department does have the power to ask details of old cases up to 10 years, however, this comes under exception where the department has proofs against you and this can be done in the search cases only.
If you are filing ITR or have filed ITR for a deceased member of your family, remember in that case, too, you have to keep the documents for either seven or 17 years from the end of the financial year, depending on the type of income the taxpayer had.
Please reach out to me without hesitation with any tax, business or accounting question, and to schedule a consultation.
Income Tax Laws are complex. It is very easy to make mistakes that can incur penalties. Do you have a Tax, Accounting or Business Question? Call Us – Mumbai CA – 9082514106.
Is your CA ignoring your Phone Calls and Emails? Call Me Immediately – 9082514106. Call us to request a consultation before March 31 2019 so that I can advise you on how to save taxes. You can ask me any question related to Tax Planning.
Remember – “If We Aren’t Working For You, Then You Aren’t Working at Your Best”