Can You File Returns for the Last 3 Years?

Keeping track of your tax returns is essential for both financial and legal reasons. Many people wonder how long they should retain their tax documents and whether they can file overdue returns. If you’ve missed filing your Income Tax Returns (ITR) for the past three years, there’s still an opportunity to correct this oversight and stay compliant with the tax authorities. Here’s what you need to know about saving your tax returns and filing overdue ones.

How Long Should You Keep Tax Returns?

It’s generally advised to retain copies of your tax returns and supporting documents for at least six years. This timeframe is recommended because:

Legal Requirements: The Income Tax Act stipulates that the tax authorities can assess and investigate your returns for up to six years from the end of the assessment year. Keeping records for this period ensures that you are prepared in case of any audits or inquiries.
Financial Planning: Maintaining past returns helps in tracking financial progress, verifying income, and managing investments. It can also be useful for loan applications or legal matters where proof of income and financial stability is required.

Filing Overdue Returns: The ITR-U Form

If you’ve missed filing your ITR for the last three years, the good news is that you can still update and file your returns.

**1. What is the ITR-U Form? The ITR-U (Income Tax Return – Updated) form allows taxpayers to update their previously filed returns or file belated returns for past years. This provision helps you rectify mistakes, report additional income, or claim deductions that were overlooked.

**2. Eligibility and Timeframe: You can use the ITR-U form to file or update returns for up to two assessment years prior to the current financial year. For example, if the current assessment year is 2024-25, you can use the ITR-U form to file or amend returns for the assessment years 2022-23 and 2021-22.

**3. Avoiding Penalties: Filing or updating returns using the ITR-U form helps you avoid penalties and interest that might accrue due to late filing. It’s a proactive way to ensure compliance and minimize any legal or financial repercussions.

**4. How to File: To file using the ITR-U form, you need to:

Download the Form: Obtain the ITR-U form from the Income Tax Department’s official website or through the e-filing portal.
Fill Out the Form: Provide accurate information and details for the assessment years you are addressing.

Benefits of Filing or Updating Returns

Filing or updating your tax returns even after the deadline has passed offers several benefits:

Legal Compliance: Ensure that you are up-to-date with your tax obligations and avoid potential legal issues or audits.
Avoiding Penalties: By filing or correcting past returns, you can avoid hefty penalties and interest charges.
Financial Accuracy: Ensure that all your income and deductions are accurately reported, which can positively impact your creditworthiness and financial planning.

Conclusion

Keeping your tax returns for at least six years is a prudent practice for financial management and legal compliance. If you’ve missed filing your returns for the past three years, the ITR-U form offers a valuable opportunity to correct and update your filings.