Time Limits for Income Tax Action: What Every Taxpayer Must Know

When you file your Income Tax Return (ITR), it is natural to expect certainty about whether the tax department can question it later. The Income Tax Department does not have unlimited powers to reopen or review old returns. The law has prescribed clear time limits within which scrutiny or reassessment can be initiated. Once these deadlines pass, the department loses the authority to take action.

For taxpayers, knowing these timelines is important for two reasons:

• It provides clarity on how long their returns may remain open for review.

• It gives peace of mind that older matters cannot be suddenly reopened.

Let’s understand the key timelines.

1. Regular Assessment Timeline

Whenever an ITR is filed, the department has only a short window to select it for scrutiny assessment.

• Time Limit: A scrutiny notice can be issued within three months from the end of the financial year in which the return is filed.

✅ Example: If you file your return for F.Y. 2024–25, the last date for issuing a notice will be June 30, 2025. After this date, the return cannot be reopened under routine assessment.

👉 This rule ensures that genuine taxpayers are not left in uncertainty for years after filing their return.

2. Income Escaping Assessment

Sometimes, new information comes to light after the regular assessment period ends. To address such situations, the law allows reopening under the category of “income escaping assessment.” The time limits depend on the value of income that has allegedly escaped assessment.

(a) Escaped Income Below ₹50 Lakh

• Time Limit: Notice can be issued within 3 years and 3 months from the end of the relevant Assessment Year (A.Y.).

• Example: For F.Y. 2020–21 (A.Y. 2021–22), the last date to issue notice is June 30, 2025.

(b) Escaped Income of ₹50 Lakh or More

• Time Limit: Notice can be issued within 5 years and 3 months from the end of the relevant A.Y.

• Example: For F.Y. 2018–19 (A.Y. 2019–20), the last date to issue notice is June 30, 2025.

👉 This distinction ensures that high-value cases remain open for longer, while smaller cases are closed sooner.

3. Closure of Old Matters

A very important safeguard for taxpayers is the closure of older cases. As per the law, all tax matters up to March 31, 2019, are now considered closed, unless they were already under scrutiny.

This means if no notice was issued earlier, the department can no longer reopen those years. For taxpayers, this brings finality and relief, as there is no risk of sudden action on long-past filings.

Conclusion

The Income Tax law sets clear boundaries for how long the department can act:

• Regular Scrutiny: Only within 3 months of filing year-end.

• Escaped Income Below ₹50 Lakh: Up to 3 years and 3 months.

• Escaped Income ₹50 Lakh or More: Up to 5 years and 3 months.

• All matters before March 31, 2019: Permanently closed.

For taxpayers, this clarity is crucial. By keeping track of these limits, you can be confident about your past filings and focus on current compliance without fear of indefinite scrutiny.