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Home > Income Tax > Help Center > Keep your Tax Records Last Updated: Feb 24th 2023

How long to keep your Tax Records and Why?

Every year, lakhs of new tax payers file their first income tax returns thanks to India's tax reforms and renewed focus on digitization to lower barriers to greater tax compliance. It's critical to comprehend which tax records / documents must be saved for future use.

Discover what tax records, data to keep safe after submitting Income Tax Return (ITR).

First-time tax filers in India are in 10's of Lakhs. The tax department expects proof of even for minor discrepancies.


This document covers
  1. Background
  2. Common reasons for keeping the Tax Documents ?
  3. Important Documents and it’s retention period
  4. How to keep them Safe and Secure ?

1. Background

  1. Taxpayers in India usually bring their tax paperwork to an intermediary (such as EZTax) or tax consultant while submitting their taxes. Although Income Tax eFiling doesn't require Form 16, P&L, Balance Sheet, Trade Statements, etc., people often neglect to save these.
  2. Now that AY 2023-24 tax season about to begin, it's crucial to know what papers to maintain and for how long to ensure tax compliance. The retention term varies by tax authority/entity, statute, source of income, and filing status (individual or business). Several tax authorities/entities have varying retention periods based on their legislation, such as Income Tax Act 1961, Companies Act, Service Tax (pre-GST), GST, SEBI, Central Excise, and source of income and filing status, such as Individual or Company.
  3. The Department's computerised rules-engine underlying tax notices requires supporting documentation even for minor amounts like Rs.200. The agency is also considering increasing the tax review percentage annually to require taxpayers to keep their tax papers.

2. Common reasons for keeping the Tax Documents ?

  1. If you make a mistake filing your return, you can file a Revised Tax Filing for the same year by referring to your source of income documents such Form-16s, Interest, Dividend, or Trade statements.
  2. Those who can move their losses from one year to the next need to have the documents and the information when they file their taxes in the future.
  3. Also, people who have to go through a tax audit have to keep their tax documents and return statements for up to 6 years for individuals, 8–10 years for businesses, and 16 years for people who have income from certain countries that is earned outside of the United States.

3. Important Documents and it’s retention period

  1. Form-16 is one of the most common documents for salaried Tax Payers. While Form 26AS is kept by the income tax filing portal, the taxpayer is responsible for keeping Form-16 for 6 years as proof of salary income, perks, and other benefits.
  2. Annual Bank, Dividend, Shareholding, or Brokerage Statements, Rent Receipts for claiming House Rent Allowance (HRA), Education Loan, and Disability Certificate (10-I), if applicable, must be kept for at least 6 years for individuals and 8 years for businesses.
  3. Capital Gains Statements should be kept for 6 years, unless they are related to a business, in which case they should be kept for 8 years. These statements should include details like the cost of buying the property and the cost of making changes to it.
  4. Books of Accounts must be kept for at least 8 years, but those who file their taxes under Presumptive Taxation (u/s 44) only have to keep them for at least 6 years.
  5. Foreign Income: If a taxpayer is claiming a foreign tax credit because of income from an asset outside of India, it is best to keep tax records for up to 16 years. The tax department can send a notice to prove such income, which requires tax certificates or statements from those countries or territories.

4. How to keep them Safe and Secure ?

  1. Most tax documents include your PAN, personal information like your address, contact information like your email address and phone number, and information about your income and benefits. In short, some of the documents do say how much you are worth. Many firms and companies want this kind of information, and scams are being used to steal it.
  2. It is a good idea to keep both paper and digital copies of your financial records in a safe place so that you can get to them even if something bad happens, like a flood. As technology changes, we usually get a new computer every 5 years. If you haven't kept a good backup, you could lose your digital copy if you don't. The paper forms should be kept in a safe place with a lock and key.
  3. Today, many people use Google Drive or Microsoft OneDrive. To keep them safe from unauthorised access, it's best to set them up for an OTP authentication. And from time-to-time, one need to check to see any updates from the drive / company. There are situations where you must use to login every now and then to keep them active, otherwise the drives may get deleted.
  4. It's also a good idea to get invoices and income statements from online businesses you work with in digital form so that you have your own copy and don't have to depend on their websites for future downloads. From what we've seen with our own customers at EZTax.in, it can be hard to get these kinds of statements from those websites because of changes in technology and organisational rules about keeping records. Google, which is a big company, hasn't kept their pre-GST invoices in India, which is a good example. So, we would tell you to download these documents and keep them safe.

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