ITR filing deadline of July 31 should be extended: Why 45 days is not enough to file income tax return

The last date for individuals to file income tax returns (ITR) is July 31, 2023, provided their accounts do not need to be audited, such as salaried persons. Every year, individuals look for an extension of the income tax return (ITR) filing deadline. This is because they essentially get 45 days to file their income tax returns even though the ITR forms are generally notified at the start of the financial year.

There's a need to extend the deadline for filing income tax returns permanently to provide individuals sufficient time to file correctly. Here is why.

Firstly, even though the ITR forms are notified by the tax department at the start of the year or even prior to that, the utilities to file ITRs or online forms for ITR filing are usually enabled in mid-May or at the start of June. For instance, this year, ITR forms were notified in February, but the Excel utility was released in April and online ITR-1 form was enabled on May 20 with pre-filled data.


Secondly, Form 16 and Form 16A are the TDS certificates that are essential documents for ITR filing. Form 16 is a TDS certificate issued by an employer with details of the total salary income paid and tax deducted on it in a financial year. Similarly, Form 16A is a TDS certificate issued by banks and other financial institutions for TDS deducted on interest, dividend and other incomes.

The last date to issue these TDS certificates is June 15. This due date was extended by 15 days by the Central Board of Direct Taxes (CBDT) in 2017. The 2017 notification extended the due date of filing TDS returns by employers, banks and other financial institutions from May 15 to May 31. Due to this extension, the last date to issue Form 16/16A became June 15 from May 31 earlier. This extension provided more time to file TDS returns, however, the subsequent time limit to file ITR was not extended. An individual which used to have almost 60 days to file their ITR now have 45 days to do the same.

Suresh Surana, Founder, RSM India, a business consulting group, says, "Most of the taxpayers, including salaried taxpayers, rely on the TDS certificates provided by their employers for the purpose of filing their income tax returns. However, considering that the last day for filing TDS returns is May 31, the tax deductors (banks and employers) issue TDS certificates generally by June 15. As such, taxpayers would have 45 days till the due date of July 31 for furnishing their income tax returns."

It is pertinent to note that TDS certificate is not a prerequisite for ITR filing and taxpayers can file their returns based on other financial documents such as salary slips and bank statements. Surana says, "However, collecting other documents and using them to calculate gross taxable income is a time consuming process. There could be scenarios where an individual has changed his employment and has not intimated the income from former employer to the new employer and as such, may need to consider both income from previous and current employer while filing the return. Further, an individual will be required to calculate the various tax exemptions he or she is eligible for."

Sujit Bangar, a former IRS officer and founder of Taxbuddy.com, says, "Last financial year, 3.28 crore ITR-1 were filed. ITR-1 is mostly filed by salaried individuals. This year, many individuals have received their Form 16 very late. Many companies are still issuing Form 16 to their employees. Many taxpayers have issues concerning TDS done and the tax regime to be followed. Many instances have been noticed where pre-filled ITR forms are not fully updated with the latest data. Individuals with professional or freelancing income have witnessed similar issues regarding a delay in getting Form 16A."

Even though banks and post offices are required to issue Form 16A by June 15 under the income tax law, in practice they usually do not do so. For example, a head post office in south Delhi only started issuing TDS certificates (for TDS on Senior Citizen Saving Scheme accounts) post that date. Further, an individual is required to collect certain other documents to file their tax returns. For instance, if they have sold equity shares, equity mutual funds, debt mutual funds, etc., they are required to collect certain documents from the mutual funds and stockbrokers concerned.

Third, apart from these, it may happen that they have received certain income from which no tax has been deducted at source: This would happen, for example, if your interest income on fixed deposits with a bank was less than Rs 40,000 in a financial year because this is the ceiling above which TDS is applicable. Hence, they need to check bank statements of all the savings accounts held by them in a financial year and take interest certificates from institutions where they hold fixed deposits to ensure that they have not missed out on any income to calculate gross taxable income. In essence, a taxpayer cannot rely solely on Form 26AS for information on total income as this Form only shows income from which TDS has been deducted.

One may argue that the Annual Information Statement (AIS), launched by the income tax department in November 2021, provides complete information on income. The aim of the AIS is to provide consolidated information regarding an individual's financial transactions the tax department is aware of. However, the AIS is not always 100% complete or accurate. Savings account interest is missing from the AIS of various individuals. Further, interest earned from Sovereign Gold Bonds and Reserve Bank of India (RBI) floating rate bonds are also not reflected in the AIS. This is because the central bank is not a reporting entity - one that has to report such transactions to the income tax department. Thus, if an individual does not check his/her bank passbooks or statements to see the other incomes, they might end up not reporting these in the ITR form.

Though it has been two years since the launch of the new income tax e-filing portal in June 2021, it is still marred by glitches.

Individuals are facing issues in claiming tax exemption on the Leave Travel Allowance (LTA) reflecting in their Form 16. Some individuals are getting an error message: "Since option NO is selected for new tax regime under 115BAC, in schedule VIA assessee has claimed deduction under section 80DD for dependent person with disability should be equal to Rs 75,000". The error was shown when an individual was trying to validate the ITR a second time and such deduction was not claimed. Such glitches create problems in filing income tax returns for individuals.

As the deadline to file the ITR looms closer, social media is full of complaints. Many people complain about the glitches they are facing while filing the ITR. They are also demanding an extension of the ITR filing deadline.

Bangar says, "Form 16/16A is required to be received by June 15. Three months from the date of the last date for issuance of Form 16/16A can be an ideal due date for filing ITR for individuals and non-audit cases. Thus, September 15 can be an ideal due date."

Other experts also agree that the deadline should be extended permanently albeit till a different date. "As mentioned earlier from the last date for issue of the Form 16 (i.e., 15th June) by the employer, the employee has only 45 days to file their return (i.e., 31st July) including the time period to compile details of other income, investment proofs (if not already considered in Form 16), to select the right Form considering his income, fill the return utility, etc. Providing a time period of say 31 more days i.e., a permanent extension of return filing timeline from 31 July 2023 to 31 August 2023 is desirable," says Surana.