Technical glitch in Income Tax portal may have cost companies crores: What happened and how

income tax

A technical issue in the Income Tax Department’s online portal has left several companies unable to complete advance tax payments by the September 15 deadline, exposing them to potentially large penalties. Tax advisors and legal counsels have approached the Central Board of Direct Taxes (CBDT) and the finance ministry, requesting relief for payments that were initiated on time but failed to process due to the system glitch.

This year, September 15 coincided with both the last date for filing income tax returns for the assessment year 2024–25 and the deadline for the second installment of advance tax. The portal, now integrating tax filing and payments, faced technical issues that prevented many taxpayers from logging in or completing their payments. Companies are now at risk of interest charges, even though their intent to comply was evident.

Advance tax rules stipulate that delayed payments incur interest at 1% per month. Since advance tax is paid quarterly, even a single day’s delay can result in a 3% penalty. For large corporations, this could amount to crores in additional financial burden, highlighting the severe consequences of system failures.

Chartered accountant Gautam Nayak noted that while the income tax return filing deadline was extended, no such extension was given for advance tax payments. “Many taxpayers could not complete their payments due to portal issues and would face a 3% interest penalty for reasons beyond their control,” he said. Tax experts argue that the CBDT should consider waiving interest for transactions that were attempted immediately after the deadline.

Legal and procedural precedents:

Practitioners point to previous CBDT guidance that allowed relief for TDS and TCS payments delayed by technical problems. Courts have also recognised system failures as valid reasons for delays in tax compliance. Some companies may pursue legal remedies if no official clarification or waiver is issued.