COVID-19 | Income Tax Filing: Deadline extensions by CBDT may provide relief, say experts

The second wave of the COVID-19 pandemic has overwhelmed the country, and as the Indian economy struggles to get back on its feet, the CBDT (Central Board of Direct Taxes) announced some respite for the individual and corporate taxpayers by providing extensions on various income tax returns (ITR) deadlines for FY 2020-21 (Assessment year 2021-22). 

The move is much welcomed, especially in the wake of a “demand shock” India is experiencing, as estimated by RBI (Reserve Bank of India), which has severely dented mobility, discretionary spendings, urban and rural employment, and more. However, the supply side remains less affected, as per RBI’s May 2021 bulletin. 

In fact, as the pandemic enters rural India with a ferocity previously unseen, the usually defensive and evergreen FMCG (Fast-moving consumer goods) sector has also taken a significant beating. This is a measure of how consumers are in no mood to spend without purpose or necessity. 

Easy Audit

In keeping with the relaxations, the IT department has extended the due dates of several individual tax return filings and compliances by around 2 months. For salaried individuals, the previous date was 30th July 2021. It has now been revised to September 30, 2021. 

For corporate taxpayers and even individual taxpayers who are liable for audit,  this deadline has been extended by a month. The final deadline now stands at November 30, 2021, from the previous October 31, 2021. Similarly, due dates for filing tax audit reports have also been pushed back by a month.

Ludhiana-based Chartered Accountant Anuriti Goyal thinks this is a good step for companies. “It will be beneficial for most companies since getting an audit done in this situation is hard. Especially in states like Maharashtra, Delhi, Karnataka, and others, which have been severely affected by Covid and are currently in lockdown, this time frame will be a relief, given that these states are just getting off the peak of the pandemic”, she said.

For all categories of taxpayers, the last date for filing belated returns under Section 139  has now been set to January 31, 2022.  However, this can cost you a fine of Rs 5,000. And if you file your returns between this date and March 31st, you will be asked to pay a penalty of Rs 10,000. It is noteworthy though, that this will only be the case if your income is more than 5 lakhs. 

Enough Relief? 

Delhi-based Chartered Accountant Umesh Goyal sees this as a positive step for individual taxpayers. “The only intention behind this extension is to give some relief to individual taxpayers, who now have 2 extra months to file their ITR. While I see that as a good step, the one-month extension for corporate taxpayers does little to help them. It is only being taken as a measure to reduce compliance-related defaults”, he said.