Tax payment deadlines have been increased suddenly again for fiscal year 2020-21 Here’s why-

Statement by Central Board of Direct Taxes.

The Central Board of Direct Taxes recently released a statement announcing another extension to the deadline of filing of Income Tax Returns, and various reports of the audit. These tax filings are for the fiscal year 2020-21, or the assessment year 2021-22. The board has reasoned this as difficulty in payments as reported by taxpayers and other stakeholders, as communicated to the press. These deadline extensions are have taken effect in two steps-

Individuals whose accounts are not to be audited has been extended till December 31, 2021. This is the second extension of this deadline and alters the earlier extension of the deadline of September 30, 2021. 

Why the extension, again?-

Recall the statement made by the finance ministry, about three months ago, in May, extending the tax compliance deadlines for the assessment year 2021-22 by 2 months, i.e., from July 31, 2021, to September 30, 2021. The ministry said the move came following the observation of the severity of the pandemic, and the distressed households that have just gotten out of the second deadly wave of the pandemic and loss of income and saving sources. Therefore, the deadline extension was aimed as a relief measure to the taxpayers and stakeholders. 

Note also that the Central Board of Direct Taxes had also increased the Income Tax Return filing deadlines for the company till November 30, a one-month extension. 

This time, however, the deadline extension has more to do with the physical problems of the system, than the intrinsic effect the pandemic has had on people’s lives. Let’s see what it is. 

Even though the Indian economy has made a remarkable transition to digitalisation, the public sector seems to be lagging behind a little in this regard. With delayed actions and bureaucratic redundancies, the public sector of the country has been infamous in a number of contexts. However, a major change was announced by the Finance Ministry in 2019 regarding the contractual deal with Infosys brought along some hopes of seeing improvement in the process of filing Income Tax Returns and a reduction in the processing time, which, currently is at an average of 63 days. 

Not long ago, Infosys made headlines in the country, again, and not for a particularly great reason. The E-filing portal of the Income-tax department was revamped and launched on June 7, 2021, and has been facing glitches since then. These glitches have been in the form of issues in password generation, data linkages for past returns, and return filings. Not only that, for about 2 days in the last month, the portal went completely out of functioning, prompting the Finance Ministry to summon and discuss the matter with Infosys MD and CEO Salil Parekh.

In the two meetings of similar nature that happened at the time, Infosys was given a deadline of September 15 to resolve all the glitches in the portal. 

What was supposed to be the “new taxpayer-friendly portal” turned out to be the very reason for their inconvenience, since it resulted in a number of complaints reigning in from the taxpayers about the problems being faced with the portal. Given the deadline to Infosys regarding the correction of these problems was about 15 days before the compliance deadlines, it was only a feasible move to extend the latter for smoother adherence to the due date. 

What are the new deadlines? 

As a result of the above discussion, individuals whose accounts are not to be audited has been extended till December 31, 2021, from the earlier extension of the deadline of September 30, 2021. 

The due date of furnishing of the report of audit under any provision of the Income-tax Act for the previous year 2020-21 which was earlier extended to November 30 from October 31 has now been further extended to January 15, 2022, it said.

The due date of furnishing a report from an accountant by persons entering into international transactions or specified domestic transactions under section 92E of the Income-tax Act for the previous year 2020-21 has been extended to January 31 next year. It was earlier extended to November 30 from October 31. The due date of furnishing of belated/revised income tax return for the Assessment Year 2021-22 has now been extended to March 31 next year from January 31, 2022.

The tax department had earlier extended the deadline for filing the equalisation levy statement in Form-1 for the Financial Year 2020-21 till December 31, against the original due date of June 30.

In a recent statement released by the Income Tax department, the authorities addressed that 1.19 crore Income Tax Returns for the fiscal year 2020-21 have been filed by the date. The department also expressed that the glitches and problems were constantly being acknowledged and resolved, with authorities maintaining a recurring contact with Infosys. It iterated that the deadline of corrections till September 15 is on the path of being met and that a smoother filing experience to taxpayers as the ultimate goal would be realised. 

The said corrections include resolving login issues, including the inability to generate OTP for Aadhaar validation, password generation glitches, failure to link old data for past returns, and problems in filing returns to errors such as interest calculation, incorrect capturing of details from Form 16 and inability to e-verify the ITR after filing.

The new e-filing portal is said to have integrated immediate processing of income tax returns in an attempt to provide quick refunds to taxpayers. For a smoother and easier process, all interactions, uploads and pending actions are to be displayed on a single dashboard. The portal is also said to have free Income Tax Return preparation software to help taxpayers with some categories, also allowing them to ask interactive questions in case of doubts. A call centre for prompt response to queries had also been set. 

While this may sound like a much-needed move to make the cumbersome process a little easier, its implementation was in the hands of Infosys, which, as yet, hasn’t seemed to be going at par. The contract was made with Infosys in 2019 for the development of the said income tax filing portal, with an aim to reduce the processing time from then-63 days, much higher than the average time taken by other countries. As yet, a payment of INR 164.5 crore has been made to the company for the development of the portal. 

Since the very launch of the portal, it showed signs of glitches, with the Finance Minister Nirmala Sitharaman herself addressing the problems on her Twitter and asking for improved handling and functioning of the portal, which, as of yet, hasn’t been effectively achieved. 

Edited by Sanjana Simlai.