Extension of due date brings no relief to assessees

Shishir Sinha New Delhi | Updated on September 13, 2021

Delay in payments to attract interest up to2 per cent; experts call for change in norms

Extension of the due date for filing Income-Tax Returns (ITR) for the second time will not end the woes of assessees as they may have to pay interest up to 2 per cent, as the the government has maintained its original position on the issue.

The Central Board of Direct Taxes (CBDT) had, on September 9, extended the due date for filing ITR, including those by salaried individuals, till December 31. This was the second extension after the first one on May 20.

It had also clarified that extension will not affect the applicability of interest rate on tax dues above a certain threshold after the original due date, which is July 31, in case of salaried individuals. Also, late payment of advance tax will also result in additional interest payment.

Ved Jain, former President of the Institute of Chartered Accounts in India, said: “On the one hand, an assessee pays interest at 1 per cent a month for delay in filing ITR beyond original due date, if the difference in actual tax liability and aggregate of TDS/ TCS/ Advance Tax exceeds ₹1 lakh, while on the other hand, delay in depositing advance tax according to schedule, will result in payment of another 1 per cent interest per month.”

Further, he explained that first provision will kick in from August 1, in case of salaried taxpayers, and the second provision from April 1.

Technical glitches

According to Sundara Rajan TK, Partner at DVS Advisors LLP, it is pertinent to note that there are concerns and technical glitches in the Income-Tax website, in relation to filing of returns and verification, among others; however, as far as tax payment is concerned, there are no issues faced by the taxpayer and the website is working seamlessly. As the payment of tax and charging of interest under Section 234A has been interlinked, the government’s intentions are very clear: it does not intend to postpone the collection of tax, and hence, it is continuing to charge such interest in case there is delay in self-assessment tax payments exceeding ₹1 lakh.

“Interest under Section 234A was introduced to curb delays in filing returns; however, the levy continues even in cases where returns are filed before the due date, but involves higher self-assessment tax payments, which seems to be a genuine consideration on account of the fact that tax revenues are the largest source of inflows for the government, and the same can be effectively utilised now when the economy is fighting its way against the pandemic,” he said.

Amit Maheshwari, Tax Partner, AKM Global, feels the process of filing of return is still marred by technical glitches. The I-T department has taken cue from last year when a similar relief was allowed due to Covid.

But to ensure that the tax collections do not suffer, the department has provided taxpayers having self-assessment tax liability of more than ₹1 lakh to pay the same and not wait till the extended deadline – December 31 – to avoid monthly interest at 1 per cent u/s 234A.

However, “it has been mentioned that the interest shall be levied from August 1, which seems unfair, and it should have been levied from October onwards,” he opined.

Published on September 12, 2021

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