ITR Due Date Extension: Applying Band-Aid When Surgery Is Needed

Central Board of Direct Taxes has extended due date for filing income tax returns to 31 Aug. What does this mean?

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The Central Board of Direct Taxes (CBDT) is at it again. It has extended the due date for the filing of income tax returns from 31 July 2019 to 31 August 2019, for the ongoing assessment year 2019-20. 31 July is the default due date for filing income tax returns by those who are not burdened by the audit requirement under any law.

This is not the first time that the CBDT has extended the due date for filing income tax returns. But it can be the last, only if it wakes up and takes drastic action to de-clog the system.

Here is a brief account of the chain of events leading to the extension.

Chain Reaction After Deadline Extension

This year, the CBDT had extended the deadline for employers to file their TDS returns, ie, Form 24Q, from 31 May 2019 to 30 June 2019. Consequently, the deadline of issuing Form 16 (TDS certificate for salary) by the employer was also extended from 15 June 2019 to 10 July 2019.

As a result, the employees waiting to get their Form 16s to file their ITRs were left with only 21 days to file their tax returns. Quite a few chartered accountants and tax practitioners, therefore, had taken up cudgels for the salaried class to extend their deadline.

It is the salaried class that files the lion’s share of returns amongst the common folk — those not hemmed in by the requirement to get their accounts audited. The CBDT has capitulated.

It’s All Online & At Your Fingertips

A taxpayer need not wait for a TDS certificate by the deductor for filing his returns. They can access their account (Form 26AS) by logging into the income tax account for which the login ID is their permanent account number or PAN.

It is true that sometimes the online statement of TDS isn’t up to date as the bank in which the TDS was deposited might have been slack or lethargic in uploading the requisite information into the income tax department’s website that shows Form 26AS.

But largely, a taxpayer can get an accurate, concise, and consolidated picture of the entire Tax Deducted at Source (TDS) scenario more efficiently and with greater ease online, rather than piecemeal collection of all the TDS certificates in hard copy from different sources.

Moreover, TDS certificates are not required to be attached or uploaded. The assessing officer can access the TDS information with just a click.

The might of the law stands diminished when its rigour has to be relaxed every now and then. According to the income tax law, for late filing of returns, the fee is Rs 5,000 till 31 December of the assessment year, and thereafter, it is doubled to Rs 10,000.

In any case, 31 July is not a difficult deadline to meet if everyone involved perform their duty conscientiously and promptly.

What CBDT Must Do To Avoid Annual Embarrassment

• No extension of due date for filing the annual return of TDS beyond 31 May. The financial year ends on 31 March. Two months are ample for filing the annual return.
• Banks must be mandated to upload TDS collections on a daily basis if not on real-time so that the online statement of TDS (Form 26AS) is up to date at any given point of time.
• Taxpayer education must be beefed up so that the citizens are able to look for online statements of their TDS scenario rather than waiting for the TDS certificates to fall on their laps from their employers.
• Taxpayers must be allowed the liberty of keeping a meticulous account of TDS from different sources — including employers — so they can rely on their own diligence and hard work while filing their returns. This is because taxpayers are often let down by Form 26AS as well as by their employers and other payers of income.

As of now, the CBDT makes a fetish of taxpayers adhering to Form 26AS. In such a scenario, at the time of assessment, if the taxpayer is found to have claimed greater credit for TDS than reflected in Form 26AS, they can be called upon to explain.

(S. Murlidharan is a Chartered Account, and has also written extensively for The Hindu Business Line between 1996 through 2013, and later started contributing regularly to Firstpost on a range of issues like business, economic, tax. He is currently based in Chennai. This is an opinion piece and the views expressed above are the author’s own. The Quint neither endorses nor is responsible for the same.)