If you are a law abiding individual who files income tax returns (ITRs) diligently every year then sooner or later you will end up with a pile of old documents kept as supporting proof for these returns and ask the question: How long does one have to preserve these papers? All documents such as rent receipts or rental agreement, section 80C tax saving documents etc. which prove the claims made by you in your tax-return are advised to be kept safely once you have filed your ITR for a particular financial year.

Here, one must remember that the income tax department does not ask you to submit any documentary evidence to substantiate the claim made at the time of filing ITR. The ITR is filed on the basis of self assessment but the income tax department has the right to ask you to prove the claims in the ITR by sending you a notice.

How long should you keep the documents?
Nowhere does it say for how long you have to keep these documents. Chartered Accountant Naveen Wadhwa, DGM, Taxmann.com says, "There is no provision in the Income Tax Act which suggests for how long the documents must be kept by the taxpayer." However, he adds, "Section 149 of the Income Tax Act specifies the time limit for issuing an income tax notice to an individual which can be interpreted as the time period for which documents must be kept."

He states that according to section 149, the income tax 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 whether you are a salaried person, self-employed or a professional," Abhishek Soni, CEO, tax2win.in, a tax-filing firm.

For those with income from foreign assets: If have any sort of income from foreign assets, then you will have to keep the ITR related documents for longer. Wadhwa says, "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 years."

Should you keep it beyond 7 years?

Yes, it is advisable to keep the documents for seven years, however, this does not mean that once the specified period is over, you can throw away the required documents. Soni says, "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 large amounts of escaped income."

But the income tax department cannot ask tax-related details from just about anyone; it is meant for certain exceptional cases. "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," adds Soni.

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.