In order to ease the process of filing income tax returns (ITR), the finance minister has proposed to stagger the timeline for filing them. While salaried individuals using ITR 1 and ITR 2 forms will continue to file till July 31, non-audit business cases or trusts can file their returns till August 31.
The deadline to file revised returns has been extended from December 31 to March 31 of the following year. For small taxpayers, a rule-based automated process will enable obtaining a lower or nil deduction certificate instead of filing an application with the assessing officer.
Reduced Portal Congestion
Amit Maheshwari, managing partner, AKM Global, a tax and consulting firm, says the change will reduce peak-season congestion and portal overload. “It will give taxpayers a longer and safer window to correct genuine mistakes thereby reducing litigation risk,” he said.
Under the existing framework, small taxpayers are required to submit formal applications to the assessing officer to obtain lower or nil tax deduction certificates. The process often involves delays, uncertainty and procedural follow-ups.
“The proposed system seeks to replace this discretionary approach with objective, technology-driven parameters, enabling faster, more transparent and predictable issuance of such certificates,” says Neeraj Agarwala, partner, Nangia & Company.
Improved Taxpayer Liquidity
This proposal is important as excess tax deduction at source (TDS) creates liquidity challenges for small taxpayers. They have to wait for refunds after filing their returns. For instance, a professional consultant with no ultimate tax liability may still face TDS at 10% under the current provisions.
By enabling an automated process for lower or nil deduction certificates, the scheme aims to address these cash-flow constraints.