Defer income-tax filing if you have to pay a penalty, say analysts

Do so once the glitches on the new tax portal have been ironed out

Owing to the hardships caused by the second wave of the pandemic, the income-tax (I-T) department has extended the deadline for individual taxpayers to file their income-tax returns (ITR) for 2020-21 (assessment year 2021-22) to September 30.

The previous deadline was July 31. While many taxpayers have been able to file their returns without facing any issue, others who tried to do so after July 31 were slapped with a fine for late filing, notwithstanding the extension.

The Central Board of Direct Taxes has not yet issued a clarification on the issue.

According to Rahul Agarwala, chartered accountant and business partner, AGSM Advisory, “It is believed that the late-filing fee is being levied because of a technical glitch in the I-T portal. Alternatively, this could be happening because the extended deadline has not been updated on the portal.”

Troubled inception

The new tax-filing portal was launched last month with the express purpose of making life easier for taxpayers. However, the launch has been marred by glitches.

Kapil Rana, founder and chairman, HostBooks, says, “Even experienced tax professionals are experiencing a number of issues. The new portal is slow; taxpayers’ profiles are not updated. There is a delay in receiving the one-time password, the ‘forget password’ option is not available, the digital signature does not work, pre-filled information is often not available, and the tax-filing software does not work properly.”

In view of all these problems, should you try to file returns now or wait until the glitches are ironed out?

Late fee rules

According to the I-T rules, if a person who is required to furnish a return of income fails to do so within the prescribed time limit, he needs to pay a fee under Section 234F. In general, the late-filing fee under this Section is Rs 5,000. However, if the taxpayer’s total income does not exceed Rs 5 lakh, the fee is Rs 1,000. 

What you should do

Many issues have arisen since the August 1 launch. Experts say the tax department is trying to resolve them. Timely filing of returns carries several benefits.

“Losses for a year cannot be carried forward unless that year’s return has been filed before the due date,” says Moiz K Rafique, managing partner, Privy Legal Service LLP.

As for whether one should file now or wait, he says, “Since the date for filing tax return has been extended till September 30, you can put the filing of tax return on hold until the department rectifies the glitch.”

Agarwala, too, has similar advice. “Taxpayers should file their returns after the extended deadline has been updated on the portal and the late-filing fee has been removed.”

Those who have already been charged a fee should make it a point to complain.

Sameer Jain, managing partner, PSL Advocates and Solicitors, says, “Raise a grievance on the new tax portal, so that the back-end team looks into the problem sooner.”

Not everyone is facing such technical issues, though.

Rana says, “If a taxpayer has all the information required for filing his tax return, and he is not facing any error on the I-T e-filing portal, he should not wait.”

The bottom line is that you should give it a shot. If you are able to get the task done, well and good. But if the portal tries to charge a fee, then you should wait and not pay up. Experts said off the record that getting the late-filing fee refunded could prove tedious.

Pay your tax dues to avoid interest charges

• A taxpayer is required to pay interest in case of delay in paying tax under Section 234A
• No relief has been provided from the interest chargeable under this Section if tax liability exceeds Rs 1 lakh
• Interest is levied if tax return is filed after the due date of July 31, or is not filed
• Interest is levied at the rate of 1% from the expiry of the original due date, i.e., July 31 till the date when the return is filed
• Even if you delay by five or six days, you have to pay interest for the entire month
• Pay your tax dues right away; you may file your ITR once the glitches on the portal have been removed
• Even if the last date for filing tax return is extended further, interest on your tax dues will continue to be levied