Exact Answer: 7 Years
Tax reporting means tax returns, tax return working papers, documents relating to any tax dispute, and any other ledger or records that must be kept in accordance with applicable tax laws or any accounting agreement with any financial authority.
Record keeping can seem tedious and cumbersome. Create an accounting system that works for a person. Simplify the documents by creating an electronic record.
In fact, keeping copies of the key records in the cloud and/or elsewhere is also important protection. Laptops and flash drives can be damaged or lost. And even with electronic records, just in case, paper ones would be more subtle.
How Long To Keep Tax Records?
A person must keep his tax returns for at least 7 years after filing. What is the reason for this? A person must keep his records for a long time, even if he has followed the proper procedures and paid taxes correctly.
This is because people will need their documents if the Income Tax Department asks for or starts an investigation of their previous returns. The Income Tax Department has the right to notify taxpayers within seven years after the end of the tax year.
This means that if a person filed the ITR for the tax year 2019-20, he must keep supporting documentation until the end of the tax year 2026-27.
The Income Tax Department has the right to request data on past cases that can go up to ten years; however, this only applies in cases where the department has evidence against you, but this can only be done in wanted cases. Many different types of taxpayers are covered for the seven years term.
Whether a person is an employee, self-employed person, or professional, the record retention period of seven years from the end of the relevant fiscal year will be the same.
Summary:
| Type of Tax records | For how long to keep them |
| Administrative records | 7 years |
| Property records | More than 7 years |
Why To Keep Tax Records For So Long?
People must keep documents for seven years, but this does not mean that after the specified period they can refuse the necessary documents.
The government stated: Pursuant to the 2017 budget amendment effective from the year 2017-18 (April 1, 2017), income tax officers can now request detailed information on cases of up to 10 years involving large amounts of leak income.
But the tax department could hardly ask anyone for details of taxation.
Tax Return (ITR) is an annual ritual for all people who made or lost money in the past year. For many taxpayers, the deadline for filing a tax return ends on August 5th. However, there are others who need to check their accounts before filing an ITR. For these taxpayers, the last filing renewal date is October 17th.
All of these returns must be filed and due to the ease with which they are filed, there is no need to attach any documents. Therefore, after filing a tax return, it is necessary to withhold the documents and evidence on the basis of which the tax return was filed.
So, while cleaning up for a vacation, a person should not get rid of financial documents, especially those related to ITR. Different documentation is required depending on the taxpayer’s records and the nature of the financial transactions. As most of the documents could be important to keep.
Conclusion
To avoid tax checks and fines, one should keep the relevant documents to support his tax return. Since tax collectors can request any related document even after several years, it is best to keep it safe and handy for as long as necessary.
There is nothing wrong with keeping records for longer than the legal period, as long as it gives you peace of mind and helps you cope with the clutter. People may want to consider storing some of the logs on the disk space of the remote computer in its cloud storage.
Although many people keep their records on paper, it is also wise to convert documents to electronic files and store them in the cloud. It is always a good idea to have a backup in case one is destroyed.
References
- https://heinonline.org/hol-cgi-bin/get_pdf.cgi?handle=hein.journals/taxtm24§ion=20
- https://www.jstor.org/stable/pdf/prancotamamnta.104.116.pdf
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Storing tax records in the cloud provides excellent protection, and having accessible electronic documents is more practical than paper copies.
I find the idea of keeping records for seven years unnecessary. We’re living in a digital age – who has the space to keep records for that long?
So all these record-keeping requirements are due to tax return filing? That seems a bit much – and isn’t a very ‘green’ practice!
The detailed explanation on the duration and reasons for maintaining tax records is enlightening. It highlights the importance of having a convenient and secure back-up system for the electronic documents.
This makes sense! It’s helpful to know why records need to be retained for so long – considering the potential of an investigation.
The explanation provided here illustrates the importance of maintaining tax records. Are there any alternatives for staying organized that are not as cumbersome?
The necessary duration to retain tax records outlined here demonstrates the importance of being able to provide supporting information when needed.
This post is useful because it highlights the reasons to keep tax records for an extended period of time. Although tedious, these records are necessary.
Is there any other way to avoid tax checks and fines other than storing records for seven years? It seems a bit excessive.
This is crucial information as it explains the reasoning behind keeping records for a prolonged period. I have found the conclusion on electronic storage and backup to be very helpful.