ITR Filing Date Extended

The finance ministry has extended the deadline for filing income tax return (ITR) for FY2018-19 by individuals to August 31, 2019 from July 31, 2019. The extension is a much needed relief as there were multiple problems being faced by individuals in filing returns by July 31. July 31 was the deadline to file income tax returns for most individuals and HUFs. This is that category of individuals and HUFs who are not mandatorily required to get their accounts audited for tax purposes.

Many chartered accountant/tax practioner societies had appealed to the government to extend the ITR filing deadline to provide sufficient time to individuals to file ITR properly. There are many reasons for this.

• This year CBDT had extended the deadline for employers to file their TDS returns, i.e., Form 24Q, from May 31, 2019 to June 30, 2019 and consequently deadline of issuing Form 16 by the employer was also extended from June 15, 2019 to July 31, 2019. Consequently, employees waiting to get their Form 16s to file their ITRs were left with only 21 days to file their tax return by the earlier deadline of July 31.
• The tax department had earlier made changes in the format of tax returns and the TDS certificates. It had also made changes in the rules for filing TDS returns by employers.
• Returns for assessment year 2019-20 relate to income earned in the financial year 2018-19. The tax department usually allows a short extension if the public faces any difficulty in meeting the deadline and a longer extension for assessees in states where exceptional events such as a natural calamity are reported.
• Experts said the change to the TDS certificate format notified in April requires employers to give the break-up of all the tax-exempt payments to the employee. Form 24Q that employers have to file with the tax department, too, has been modified to provide the break-up of gross salary in terms of value of perquisites and profits in lieu of salary. Bifurcation of tax-exempt allowances and the various deductions claimed have also to be given. The move is part of an effort to reduce ambiguity in filing returns and to make assessment easier by capturing finer details.
• The Union budget for FY20 also proposed that return filing will be compulsory for even those who fall below the basic exemption limit of ?2.5 lakh annual income, if they get into specified high-value transactions such as spending on foreign travel.
• If the ITR is not filed by an individual before the expiry of the deadline, which is usually July 31, then the individual would have to pay a late filing fee of Rs 5,000, if filed by December 31. If the ITR is filed between January 1 and March 31, then late filing fees of Rs 10,000 will be levied.
• With extension of the deadline, individuals will have more time to file their ITRs without worrying about late filing fees.
• Even though it is easier to fill salary details in ITR-1 this year as individuals are required to just copy-paste the same from Form 16, sources of interest income are required to be provided in greater detail. This could be a tedious process.
• Further, while the tax department has started providing pre-filled XML for ITR forms 1 to 4, the pre-filled XML file for ITR-2 does not contain salary details which individuals have to fill-in by themselves. ITR-2 asks individuals to provide detailed break-up of salary such as basic, HRA and so on received by choosing the options from the drop-down menu.
• The calculation of long-term capital gains tax on equity shares and equity mutual funds is also a complicated process due to the grandfathering clause which came into effect from FY2018-19 onwards. In addition to that, individuals were also required to provide details such as ISIN code/Folio number, name of shares/units and so on for sale of equity shares and equity mutual funds. However, later on this was made optional.

Efforts at Simplification

Off late the discipline of tax filing has been built in the tax filers and we saw some of them come to us in April with all the details. But we haven’t been able to file their returns too until now due to the technical glitches. Yesterday there were issues in NRI tax filing and today we have been seeing some bug in presumptive taxation returns. But issues should be ironed out during this week, we presume.

Though one would not have to pay the penalty of Rs 1,000-5,000 for filing returns between July 31, 2019 and August 31, 2019, there are other aspects one must ensure are in place.

When deadline extensions are announced, you are permitted to pay the self-assessment tax too by the new deadline date of August 31, 2019. However, when it comes to the interest on advance tax, which should have been paid by March 31, 2019, and has not been paid, then the additional month interest would be applicable if you wait for August 31, 2019. One has the option of calculating the advance tax amount and making the payment in July itself to avoid the additional interest, even though the tax filing can happen later within the new deadline.

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