The due date for filing income tax return has been extended considering the technical and practical difficulties faced by taxpayers while filing their ITRs.
The Central Board of Direct Taxation (CBDT) vide circular dated July 26, 2018 extended the timeline to file the Income Tax Return (ITR) for the Assessment Year (AY) 2018-19 for certain category of taxpayers from July 31, 2018 to August 31, 2018. The timeline has been extended considering the technical and practical difficulties faced by the taxpayers while filing their ITRs. Some of the key considerations have been detailed below:
1. Delay in release of ITR form utilities and revisions in the schemas (graphics): Although the ITR forms for AY 2018-19 were notified on April 3, 2018, the ITR utilities that are required to file the tax returns online were released much later in the month of May 2018 (except ITR 1 utility which was released on April 14, 2018). Further, the schema for ITR 2, 3 and 7 were last updated on July 7, 2018 and for ITR 5 was updated on July 13, 2018.
2. Delay in reflection of credit of taxes deducted at source (TDS) in the Form 26AS: Form 26AS is a consolidated credit statement that can be downloaded from income tax website. The time line for submission of TDS statements for the last quarter of the financial year is May 31, 2018 and issuance of Form 16 (TDS certificates issued by the tax deductor) is June 15, 2018.
Typically, most tax payers get their Form 16 on or after June 15, 2018 and the TDS credit in Form No. 26AS gets reflected thereafter. It may also be informed that most taxpayers did not get their Form 16 and 16A on time due to late issuance of the same by the tax deductor (may be due to technical glitches or delayed filings of e-TDS returns) which could have led to a delay in the filing of the ITR.
It is pertinent to note that reconciliation of Form 16, Form 26AS and other documents reflecting income earned/ received and taxes paid is of utmost importance to avoid non-reporting or under-reporting of income/deductions.
3. Penal provisions of section 234F of the Income-Tax Act, 1961 (the Act): Effective AY 2018-19, a new section 234F was inserted vide Finance Act 2017, levying a fee for default in furnishing ITR. The fee ranges from Rs1,000, Rs 5,000 and Rs 10,000, depending upon the income and timing of filing return beyond the prescribed timeline. Even for delay of a day the taxpayer has to incur a penalty of Rs 5000, if the total income exceed Rs 5 lakh, else Ts 1000.
4. Natural calamities: Heavy rains in several parts of the country had severely impacted the normal life of individuals and also the disrupted basic infrastructure needed to file the return.
The move to extend the timeline comes as a breather for taxpayers, as the penal implication under section 234F will not be applicable for tax returns filed up to August 31, 2018. However, though the due date has been extended, those who have taxes to pay should pay before July 31, 2018 to save additional interest implications under section 234B of the Act – interest applicable on account of late payment of advance tax.
Overall, this is a welcome move by the authorities which will surely go on to benefit a lot of taxpayers who wouldn’t have been able to file their ITR by 31 July 2018.
(By Divya Baweja, Partner with Deloitte India)