Income Tax department offers 'Discard return' option: When you can use it

The Income Tax Department has launched a new feature called ‘Discard Return’. This new feature allows an individual to completely discard, i.e., delete their previously filed unverified income tax return (ITR). This means that the ITR that was previously submitted by an individual but not verified can now be deleted from the income tax department‘s records.

This will help an individual to avoid going through the revised ITR process of correcting mistakes in the originally filed ITR. “Earlier, if an individual wanted to correct a mistake in their submitted ITR, it could only be done once the original ITR was filed and verified. Once the original ITR was verified, then the individual was required to file a revised ITR to correct mistakes,” says Mihir Tanna, associate director, S.K Patodia and associates, a chartered accountancy firm.

Now using the new ‘Discard Return’ feature, an individual can delete their filed original un-verified ITR and file a fresh ITR.

However, it is important to note that the new feature comes with certain conditions.

Pre-conditions for using discard ITR feature

• The original ITR filed must not be verified using any online or offline ITR verification methods.
• The original ITR must be for AY 2023-24 (FY 2022-23) and onwards. This means that any ITR filed on or from April 1, 2023, can be discarded from the income tax records.

If an individual is using the ‘Discard Return’ feature, then one must be aware of the consequences of using it. The tax department has clarified in a detailed FAQs about Discard Return on its website, “If the ITR filed under section 139(1) is Discarded and the subsequent return is filed after the due date under section 139 (1), it would attract implications of belated return like section 234F etc., Thus, it is advised to check whether the due date for filing the return under section 139 (1) is available or not before discarding any previously filed return.”

“The ITR filing timelines would go on as they should irrespective of the fact that the individual has discarded their previously filed but not verified ITR. This is because once an ITR is discarded and another fresh ITR is filed it is considered as a new ITR and not a mere replacement for the previously filed ITR,” says Tarun Kumar Madaan, Tax Head, Coherent Advisors.Here is an example to understand this. If an individual has discarded their filed (but not verified) original ITR (filed on July 25, 2023) after July 31, 2023, and then files a fresh ITR on August 5, 2023, then the filed fresh ITR would be filed under section 139 (4) i.e., belated ITR. However, if the individual has discarded their filed (but not verified) original ITR before July 31, 2023, and also filed a fresh ITR before July 31, 2023, then the filed ITR would be filed under section 139 (1) i.e., original ITR.As per the current income-tax laws, the last date to file the original ITR is July 31. Additionally, an individual has 30 days to verify their ITR from the date of submission. However, if an individual misses the last date to verify their ITR, then an individual can file a condonation delay request. This request allows an individual to request the income tax department to verify their ITR after the expiry of the deadline. If the income tax department agrees, an individual can verify their ITR.

Hence, before discarding the unverified original ITR, an individual must fully understand the implications such as penalty of belated ITR, carried forward of certain losses are not allowed etc.

Suppose Mr. A filed his original ITR for AY 2023-24 (FY 2022-2023) on July 31, 2023, under section 139 (1), but has not verified the filed ITR by August 30, 2023. If he uses the ‘Discard Return’ feature to delete this original ITR, then a new ITR would be filed under section 139 (4). However, a penalty of up to Rs 5,000 will be applicable as well. However, if he applies for a condonation delay request and the income tax department agrees, then he can verify the originally filed ITR to avoid penalty.

“It must be noted that a revised ITR could only be filed if an individual has discovered any omission or error in the previously submitted ITR. If an individual is discarding this previously submitted ITR and then subsequently filed a fresh ITR, no such limitations apply here,” says Madaan.

How to use discard return feature?

Here is how to use the discard return feature as per the tax department’s FAQs:
Step 1: Login to www.incometax.gov.in
Step 2: Navigate to ‘e-File’ and select ‘Income Tax Return’ option.
Step 3: Click on ‘e-Verify ITR’. There would be a button titled ‘Discard’.

FAQs issued by income tax department on Discard return.

1. I filed my Original ITR u/s 139(1) on 30th July 2023 but not yet verified. Can I Discard it?
   Yes, user 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. 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.
2. I Discard my ITR by-mistake. Is it possible to reverse it?
   No, if ITR is Discarded once, it can’t be reversed. Please be vigilant while availing Discarding option. If an ITR is Discarded, it means that, such ITR is not filed at all.
3. Where can I find “Discard option” ?
   User can find Discard option in below path : www.incometax.gov.in → Login → e-File → Income Tax Return → e-Verify ITR → “Discard”
4. Is it mandatory to file subsequent ITR if I “Discarded” my previous unverified ITR ?
   A user, who has uploaded the return data earlier, but has made use of the facility to discard such unverified return is expected to file subsequent an ITR later on, as it is expected that he is liable to file the return of income by way of his earlier action.
5. I sent my ITR V to CPC and it is in transit and not yet reached CPC. But I don’t want to verify the ITR as I get to know that details not reported correctly. Can I still avail “Discard” option?
   User shall not discard such returns, where the ITR-V has already been sent to CPC. There is an undertaking to this effect before discarding the return.
6. When can I avail this “Discard” option and can I avail this “Discard” option multiple times or only once?
   User can avail this option only if the ITR status is “unverified” / “Pending for verification”. There is no restriction on availing this option multiple times. Precondition is “ITR status” is “Unverified” / “Pending for verification”.
7. My ITR filed for AY 2022-23 is pending for verification. Can I avail this “Discard” option?
   User can avail this option only from AY 2023-24 onwards for the respective ITR. This option will be available only till time limit specified for filing ITR u/s 139(1)/139(4) /139(5) (i.e., 31st December of respective AY as of now).
8. I discarded my Original ITR 1 filed on 30th July 2023 on 21st August 2023 and I want to file subsequent ITR on 22nd August 2023. Which section should I select?
   If user discards the Original ITR filed u/s 139(1) for which due date u/s 139(1) is over, they are required to select 139(4) while filing subsequent return. As there is no prior valid return exist, date of Original ITR / Acknowledgement number if Original ITR fields are not applicable. Further, if user wants to file revised return in future, he needs to provide details of “Original filing date” and “Acknowledgement number” of the valid ITR i.e., ITR filed on 22nd August 2023 for filing revised ITR.