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Delayed release of electronic ITR forms may compel CBDT to extend the filing deadline
May, 12th 2018

Income earned during a financial year is evaluated and reported to the Income-tax Department during an assessment year. Such income is reported to the department in income tax return (ITR) forms. Every year the department issues new ITR forms and utilities for taxpayers to prepare and file returns. The return forms are changed every year after incorporating the changes made during the Union Budget in the provisions of Income-tax Act. The Central Board of Direct Taxes (CBDT) is often criticised for delays in issuing the ITR forms and utilities.

The Punjab and Haryana High Court, in case of Vishal Garg v. UOI [2015] 61 taxmann.com 418 (Punjab & Haryana), had directed CBDT to make available the ITR forms on the very first day of the assessment year so that every taxpayer gets sufficient time to file their returns.

The ITR forms for the current assessment year 2018-19 were notified by the department on April 3, 2018, without providing the return filing utilities and schema. This year, 7 ITR forms have been notified for filing of return by different categories of taxpayers. However, till date return filing utilities have been released only for ITR 1 and ITR 4 which were issued on April 20, 2018 and May 10, 2018, respectively.

Individuals and Hindu Undivided Families (HUFs) are required to file returns using either of forms ITR 1, ITR 2, ITR 3 or ITR 4. Last year more than 64 million returns were filed only in these 4 forms, which is roughly 96 percent of total returns filed by all taxpayers, including corporate taxpayers and trusts.

July 31, 2018 is the last date for filing of returns for most of the individual taxpayers and electronic filing of return is mandatory in almost all cases. As per statistics released by the department, 52.61 percent of total ITRs are filed using the Department's utility. Only 122 days are allowed by the tax department after the end of the financial year to prepare and file ITRs. More than 40 days have already elapsed and without releasing the utilities it would not be possible for taxpayers to file their tax returns. Rule 12 of the Income-tax Rules, 1962 mandates almost every taxpayer to file ITR through online mode and, thus, ITR utilities play a vital role in filing of returns electronically.

The last date to file ITR is July 31, 2018 and almost a third of the time is over. The CBDT has not released the utility for filing of returns ITR-2 and ITR-3. Though e-filing statistics suggest that almost 50 percent of taxpayers file return of income using ITR-1 and ITR 4, yet a significant number of taxpayers are still waiting for release of remaining utilities for other ITR forms to file their return of income.

Late release of ITR utilities will definitely result in last minute rush and heavy usage of the Department's e-filing portal. The tendency to file returns by taxpayers on the last few days always results in the crashing of the online portal. The e-filing website of the income tax department becomes inaccessible during the last days, which ultimately results in extension of due dates.

It may be noted that the Finance Act, 2017 has provided hefty late filing fees in case of delay in filing of return by taxpayers. This time taxpayers will have to pay mandatory late filing fees under section 234F which may vary from Rs 1,000 to Rs. 10,000 if returns are filed after the due date. Hence, filing ITR within the due date is important for taxpayers this time.

Further, Income-tax Act, 1961 requires many taxpayers to file ITRs without waiting for the last date to dawn. In other words, provisions for filing of ITR on or before the prescribed due date is not applicable for certain classes of persons like, individuals leaving India with no intention to return, etc. In these cases, taxpayers are required to file ITR before leaving India. Thus, timely release of ITR forms and utilities is essential for these taxpayers.

Therefore, it is suggested that government should plan well in advance to launch ITR forms and needed utilities in the first week of the start of the assessment year to give taxpayers sufficient time to file their returns. Early release of ITR utilities would mean that taxpayers can avoid last minute hassles on the e-filing portal and it will not require the CBDT to allow extension in due dates to file returns.

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