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07 Jan 2021

Extended Filing of Tax Returns – Some Issues

Owing to the ongoing COVID pandemic situation in the country and the resultant disruption in normal business operations, several representations from professional bodies and other stakeholders were made to the Hon’ble Finance Minister to further extend the due dates for Income Tax Audit, GST Audit and filing of Income tax returns.

In response, the Government has, through its Press Release dated 30th December 2020, agreed to extend the various due dates, key details of which are tabulated below:

Direct Tax:

DescriptionExtended due date1Further extended due date
Income tax return (Non audit cases)31st December 202010th January 2021
Income tax return where Audit is applicable (Including partner of the firm)31st January 202115th February 2021
Tax audit, Transfer pricing audit or any other audit31st December 202015th January 2021
Declaration under ‘Vivad se Vishwas Scheme’31st December 202031st January 2021

Indirect Tax:

DescriptionExtended due dateFurther extended due date
GST Annual return in GSTR 9 for F.Y. 2019-2031st December 202028th February 2021
GST Audit report in GSTR 9C for F.Y. 2019-2031st December 202028th February 2021

Some practical issues that arise post this extension:

  1. The further extension granted is certainly a relief measure from the Government. However, keeping in mind the severity of the disruption that continues to be impacting the business operations of the country at large, this short extension, when compared with the representations that were made before the CBDT, is unlikely to satisfy the needs and expectations of many stakeholders and professionals.
  1. It is likely that despite the extension announced by the Government, professionals and stakeholders would be keenly awaiting the outcome of the writ filed before the Mumbai High Court 2 and Gujarat High Court 3 appealing for further extension.
  1. The waiver of interest u/s. 234A for interest on late filing of return, granted in the earlier Press Release, dated 24th October 2020, shall also stand extended till the new due dates i.e., 10th January 2021 and 15th February 2021. However, it may be noted that this benefit has been extended only for small assessees having self-assessment tax liability (i.e., after reducing TDS/TCS, advance tax, etc) up to Rs. 1,00,000 and that too, only if the same is paid within the extended due date.
  1. In case of senior citizens (above 60 years of age) and super senior citizens (above 80 years of age) if their tax liability exceeds Rs 1 lac, the interest u/s. 234A would be charged, even if the return is filed within the extended due date. Ideally, the interest waiver should have been extended to all senior and very senior citizens, as practically, it is difficult for them to venture out during the ongoing pandemic and arrange for the required documents etc, so as to be able to compute and pay their taxes within the original due date. 
  1. Further, the Government has not reduced the fee u/s. 234F for belated filing of a return, which would have been only Rs. 5,000 in case the return was filed after the original due date but within 31st December 2020. However, currently, since the December period has elapsed, assessees would have to pay an increased fee of Rs. 10,000 in case there is further delay in filing the return beyond the extended dates. In case of assessees having total income up to 5,00,000, the maximum late fees will be Rs. 1,000.
  1. It would be worthwhile to see if the Government extends the due date for filing of “belated return” and “revised return” for FY 19-20 (AY 20-21), the statutory due date for which is 31st March 2021. Considering the revised extended deadlines now, there is hardly any time left for filing revised or belated returns. Ideally, this date should have also been pushed by 6 – 9 months (30th September 2021 or 31st December 2021). However, the Government has been silent on this issue.
  1. The Government has also not addressed the issues concerning assesses who may still be stranded outside India and hence are unable to e-file their Income tax returns for FY 19-20 on time.

Some key issues on which clarity from Government is still awaited are as follows:

  1. Although the Government has extended Income tax return filing dates both for audit and non-audit cases, however, no similar extension has been announced by the Ministry of Company Affairs (MCA), vis-à-vis compliances under the Companies Act. This makes the income tax extension less meaningful or severely dilutes the essence of income tax extension relief in case of companies and LLPs.
  1. Considering that the country-wide lockdown norms are not yet lifted and with the prevailing disruption in carrying normal business activities, it has been difficult for stakeholders to pay advance tax for F.Y. 2020-21. However, the Government has not yet announced any relaxations, either with respect to payment of Advance tax or waiver of penal interest for any non-payment or short payment of advance tax.
  1. The CBDT had, vide Circular no 11/2020, clarified some tax residency issues arising for F.Y. 2019-20. However, no such clarification has been issued till date for F.Y. 2020-21 impacting determination of residential status and related Permanent Establishment (PE) or Place of effective management (POEM) issues getting triggered.
  1. The extension of statutory filing deadlines for F.Y. 2019-20 has resulted in the overlapping of limited time for F.Y. 2020-21 compliance; as such, there would be a need for the Government to reconsider the statutory time limits with respect to TDS compliances, assessments, re-assessments, audits etc.

With respect to GST annual return and GST audit for F.Y. 2019-20, professionals and stakeholders have raised serious concerns for time limit being extended only up to 28th February 2021; as the utility for GST annual return and that for reconciliation statement, is made available only in the month of December 2020 and secondly the same overlaps with the extended time limit for income tax audit return, which is 31st January 2021.

1 Notification No 88/2020/F. No. 370142/35/2020 – TPL dated 29th October, 2020.

2 The Chamber of Tax Consultants & Another Vs Union of India & Another (Bombay High Court)

3 The All-Gujarat Federation of Tax Consultants Vs. Union of India (Gujarat High Court); Filing (Stamp) Number: Special Civil Application – No. 23375 of 2020

Image Credits: Nattanan Kanchanaprat on pixabay.com

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