Will the Income Tax filing deadline be extended beyond 31st July?

Under normal circumstances, the deadline to file returns for the financial year ended March is the last day of July. However, in the last 2 years, the government has given liberal extensions due to the practical hassles that people faced during the pandemic and then during the relapse of 2021. In both the cases, the delay ranged from 4 months to 6 months. However, when an exception is made for 2 years in succession, then it is assumed to be a norm than an exception. That appears to be the problem as another delay is expected.

At times this acts as a double edged sword. When people assume that a delay in the filing deadline would come, they tend to delay their filing closer to the deadline. This creates unnecessary pressure on the system and just to alleviate the pressure, the Income Tax department is forced to offer another extension. For the fiscal year FY22, there is no real  justifiable reason for the delay in the filing date, but considering the limited number of people who have filed their returns till date, the complacency could become the reason. 

There are two kinds of reasons for the delay. The first was the disruption caused by the pandemic which led to most companies delaying the finalization of accounts and providing the Form 16 to their employees. That was a genuine reason. However, another reason has been the software underlying the tax filing, which has been created and managed  by Infosys. Over the last few years, this software had just had too many glitches and that  by itself may become a strong reason for the postponement of the due date for filing. 

Here are some thoughts on the extension of the filing date for Income Tax

The debate of postponement of the last filing date came up after the Income Tax department tweeted that Infosys had highlighted irregular traffic on the portal, which had led to delays. Would we really see an extension again. Here are some key points to know.

    a) Normally, when the Income Tax department publicly admits about a delay in execution of transactions on the income tax website, it can assumed to be a tacit indication of a postponement of the last e-filing date. 

    b) Ironically, the ITR Forms and Utilities were released well in advance this year, so the extension may not really be justified. However, if the portal slows down, then the CBDT may have no choice but to extend the deadline to enable compliance. After all, the deadline does not really sense if the smooth execution and fulfilment is not there.

    c) The numbers have not been too encouraging. As per the latest data put out by the Income Tax Department, till the 10th of July 2022, around 99 lakh income tax returns had been filed as against the potential 7.50 crores ITR filings likely in FY22. Practically, it is not possible to complete 6.50 crore ITR filings in a span of 21 days.

    d) The catch here is that the software and the portal submissions need to work smoothly to expect people to file returns on time. Unless the portal works smoothly and deadlines are extended by at least 1 month, it would be almost impossible for the taxpayers to comply with the deadline. Hence a postponement may be fairly inevitable.

    e) The entire episode reeks of one major concern, what happens to the credibility of the IT department and of the software provider to the IT department. For instance there have been 8 deadline extensions in the last 11 years, which does not speak very well about the consistency of service offering. There is no harm in extending the deadline, but it should not an exception and not the rule.