who For First Time In 3 Years, Centre Refuses To Extend Tax Return Deadline: 5 Points

The deadline to file an Income Tax return (ITR) is July 31, and the government isn't keen to extend the timeline any further. Taxpayers should file their ITRs before the due date to avoid paying penalties or other legal consequences. Over the last two financial years, the government extended the deadline for filing ITR to ease compliance for taxpayers battling the Covid-19 pandemic. However, the situation is different this year as the Centre isn't considering extending the deadline, a step to be seen for the first time in three years. "So far, there is no thinking of extending the last date of filing," Revenue Secretary Tarun Bajaj said last week.

As per Income Tax (I-T) rules, the deadline for filing ITR of a fiscal by individual taxpayers -- who do not need to get their accounts audited -- is July 31 of the subsequent financial year.
The Revenue Secretary said the taxpayers' feedback is that the return form has become very easy to file and that refunds are also quick. The tax department has launched a new I-T filing portal, which it says "is now very robust to take the increased loads."
"Last time, we had over 50 lakh (filing returns on the last date). This time, I have told my people to be ready for 1 crore (returns filed on the last day)," Mr Bajaj added.
In the last fiscal year 2020-21 (FY21), around 5.89 crore ITRs were filed by the extended due date of December 31, 2021. Through ITR, a person is supposed to submit to the Income Tax Department of India. It contains information about the person's income and the taxes to be paid on it during a particular financial year.
If an individual's income exceeds the exempted limit, s/he must file tax returns. Under the new tax regime, the exemption limit is set at Rs 2.5 lakh. Under the old regime, the exemption limit is Rs 2.5 lakh for those under the age of 60; Rs 3 lakh for those between the ages of 60 and 80 (senior citizens); and Rs 5 lakh for those above the age of 80 (super senior citizens).

“Taxpayers get merely 1.5 months to reconcile Form 26AS, AIS and TIS before they can file their returns,” said Kumar. “Several developed countries like the UK and the US give six to 10 months to file returns post close of the year.”

Tax experts said the government should reconsider the time-period allowed to file returns.

“The tax department may consider giving more time to a taxpayer to complete and file the tax return; to gather data, cross-verify AIS data, ensure accurate and complete detailed reporting as per the prescribed tax return forms,” said Sonu Iyer, partner and national leader, people advisory services, at EY India.

While the government has taken steps like providing pre-filled ITR forms to reduce the burden for people, various tax-related compliance norms have also increased. Iyer pointed out that choosing between the new and old tax regimes takes time when tax-filers and CAs have to assess AIS, Form 16s and so on.

“Professionals are also overwhelmed with competing timelines for GST filings,” added Iyer.

Low number of returns

The number of tax-returns filed so far has been low compared to the previous few years – about 20 million out of 100 million registered users.

In its representation, AIFTP said that until July 23, only about 19.9 million ITRs had been filed on the income tax portal compared with 66.3 million ITRs a year earlier. That leaves about 45 million ITRs left to be filed by July 31.

Technical glitches

Given the large number of returns yet to be filed, there will be pressure on the e-filing portal to handle traffic, which can result in malfunctions and glitches.

The income tax department itself had tweeted about this on June 2, saying, “It has been noticed that taxpayers are facing issues in accessing ITD e-filing portal (https://www.incometax.gov.in/). As informed by @Infosys, they have observed some irregular traffic on the portal for which proactive measures are being taken. Some users may be inconvenienced, which is regretted.”

AIFTP said that the issues are still there.

“We have to further state that even the income tax portal is not functioning properly. Even today on 23.07.2022, many people are facing problems in viewing/downloading Form No. 26AS, which has been reported by many people on social media as well,” AIFTP wrote.

Act of god

Some factors beyond human control have also been cited to justify extension of the deadline.

“The heavy monsoons in some states and the intermittent impact of Covid are some other challenges that people are facing. Hence, it’s best to ease the pressure on the taxpayers and grant a short extension of one month for tax filing,” said Raote.

Although Covid-19 is no longer as disruptive as it was in the past, tax experts said the after-effects still linger.

“Indian government has done a splendid job of supporting businesses and accommodating the compliance cycle by providing extensions of filing deadlines in the past few years. We are now coming out of that situation and behavioural change takes a little time, particularly when for the last two years extensions were for a significantly longer time,” Kumar said, talking about tax-filers having to adjust to normalcy.

Moneycontrol’s take

While most experts believe there is a need for more time and that the government should consider the demand to extend the ITR filing deadline, Moneycontrol suggests you file your tax returns at the earliest.