Why do taxpayers need date extension for filing income tax return? Anyone listening?


Why do taxpayers need date extension for filing income tax return? Anyone listening?

First of all, there is a reasonably good and noticeable period of delay in releasing the return filing utility for A.Y. 2019-20. Thoguh the ITR forms are notified timely (though after the beginning of financial year, in contravention of judicial suggestion earlier), it is of no use without utility. More than 95% of the return filing is required in e-mode and no physical filing is permissible in rare cases now.

Let us ignore the delay in releasing of utility for filing ITR.

Changes is further implemented in the middle of the year in the TDS quarterly return for salary TDS. Result, the due date for filing TDS quarterly return is extended.

Now, while designing and implementing the utility, somewhere the vision is also missing. The ITR form so designed was not appropriate to capture all the required details in case of share transactions. If taxpayer has sold multiple shares in FY 2018-19, there was serious trouble as ITR form was allowing only consolidated figures and not permitting of reporting each transaction separately. Filing aggregate values was resulting in mistakes as shares transactions are slightly different from other transactions of capital gain like one from property, gold etc. LTCG on shares transactions is different for the reason that there is a grandfathering clause which has allowed amount earned till 01.02.2018 exempt from tax.

The lacuna is rectified now and a new utility has been released to ensure proper reporting in the ITR form.

As a result, the changes are summarized as under:

  1. In case of long term capital gains (LTCG) arising on sale of equity shares or unit of equity oriented fund or unit of business trust on which STT is paid, separate computation of capital gains should be made for each scrip or units of mutual fund sold during the year and aggregated amount should be provided in item No. B4 (ITR 2)/B5( ITR 3) (in case of residents) or item No. B7 (ITR 2)/B8(ITR3)(in case of non-residents).
  2. The Utility has been updated and relevant validation rules are relaxed.
  3. Taxpayers need to download the latest utility available under
  4. Now, Updated utility of ITR-5 & ITR-6 will also be needed to incorporate suitable changes therein for the same change will be available shortly.

In the last financial year, tax audit reporting was changed in the middle of the audit report filing season without realizing the harassment and trouble it causes to the taxpayers and tax professionals.

The best practice would be to stop the procedural changes in the middle of the year. It would be better if the law implementation is followed by vision & practical approach.

We have best brains at the top of our regulator.  They just need to ensure that the changes are not done during the peak of return filing. Plan well, implement timely and hopefully there will not be ANY demand for date extension by the taxpayers.