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Should the Government Consider Extending the due date for filing Tax Audit, Transfer Pricing Audit and Income Tax Returns?

Aishna Kukreja 
Updated on 31 December 2020

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Update:

The Finance Ministry has extended the due dates for filing Income Tax Returns, Tax Audit Reports, and GST Compliances. The updated due dates are as follows:

1. INCOME TAX RETURN (For taxpayers who are required to get their accounts audited) - 15th February 2021

2. INCOME TAX RETURN (For taxpayers who are not required to get their accounts audited) - 10th January 2021

3. TAX AUDIT REPORTS - 15th January 2021

4. GST ANNUAL RETURN (FY 19-20) - 28th February 2021

To read the official announcement, click here

The year 2020, although coming to an end, doesn't take with itself the hardships it caused to uncountable people of the country. It is no news that the cases of COVID-19 are rising with each passing day. While some states may have seen a temporary decrease in the number of cases, the overall situation of the country is still pretty sensitive.

Keeping in view the effect of COVID-19 on the offices of Chartered Accountants and Taxpayers, the Honorable Finance Minister Smt. Nirmala Sitharaman had extended the due date for filing Tax Audit Return, Transfer Pricing Audit Return, and Income Tax Returns to 31st Jan 2021, 31st Jan 2021, and 31st Dec 2020 respectively.

However, is there a need to extend these due dates further? Let us analyze!

1. The COVID-19 Pandemic

The main reason for extending the due dates to 31st Dec/31st Jan was because of the COVID-19 pandemic. However, as discussed earlier in this article, the cases of COVID-19 are still on a rise and so are all the problems that come with it. The inconvenience of less staff, travel, COVID+ employees, and senior employees still persists, due to which the details required for completing audits and carrying on tax audit and filing the return of income are not being received promptly and thus the audits cannot be efficiently performed.

Should the Government Consider Extending the due date for filing Tax Audit, Transfer Pricing Audit and Income

2. Due Dates for Other Compliances are Overlapping

The due date for filing various GST Returns and MCA compliances are overlapping with the due date for filing Tax Audit Return, Transfer Pricing Audit Return and Income Tax Returns. While offices with different departments for each type of compliance are not having much trouble with the due dates of other compliances overlapping, the small offices and practitioners are facing a lot of hardship due to that.

 

3. Delay in Release of Income Tax Utilities and Instructions

Many professionals and associations have also correctly pointed out that the release of income tax utilities and instructions was delayed this year, making it available for usage after June 2020, instead of April 2020. On an average, the utilities and instructions have been delayed by 4 months, owing to the pandemic and the same is being constantly updated, further causing more trouble to the professionals and taxpayers.

In fact, a user on Twitter correctly made a suggestion that just like there are due dates for filing the returns, there should also be due dates for releasing the Income Tax Utilities and Instructions for the concerned year.

Image

 

Mentioned below is a detailed chart of the release date and the latest update date of the Income Tax Utility:

Sr. No.

Income
Tax
Return

Schema Release
Date

Schema Updation
Date

Utility Updation
Date

1

ITR 1

June 2, 2020

September 9, 2020

December 1, 2020

2

ITR 2

June 26, 2020

November 4, 2020

December 3, 2020

3

ITR 3

July 31, 2020

November 9, 2020

December 1, 2020

4

ITR 4

June 5, 2020

October 15, 2020

December 1, 2020

5

ITR 5

August 25, 2020

November 18, 2020

December 3, 2020

6

ITR 6

September 22,
2020

November 22, 2020

December 3, 2020

7

ITR 7

September 3,
2020

December 8, 2020

December 8, 2020

8

Form 3CA-3CD

-

November 4, 2020

-

9

Form 3CA-3CD

-

November 4, 2020

-

10

Form 3CEB

-

November 4, 2020

-

4. Additional Requirements

This year, the authorities have also asked for certain additional information, which was not required previously. These include:

  • Details of Cash Portions in Gross Receipts
  • Details of Cash Portion in Gross Payments, both as required u/s 44AB (a) and of Tax Paid u/s 92 CE

5. Change in Tax Audit Report Forms

CBDT, w.e.f 1st October 2020, also made various changes in the Tax Audit Report Forms, which further required time and understanding to adhere to. To read the changes made, click here.

6. Regular bugs on the Income Tax Portal

The users are also experiencing minor and major bugs on the Income Tax Portal, which disrupts the filing of the returns. One such recent bug reported was that taxpayers and professionals weren't able to see a Captcha Code while logging on the portal.

Image

Users across the country fell victim to this bug for a day or two, further disrupting their flow of work and causing unnecessary trouble in meeting the deadlines.

What are the proposed due dates by various associations, professionals, and taxpayers?

Mentioned below are the proposed due dates that have been requested by various tax associations, professionals, and taxpayers:

Return type

Current Due Date

Proposed Due Date

Tax Audit Return

31st December 2020

28th February 2021

Transfer Pricing Audit Return

31st December 2020

28th February 2021

Income Tax Returns

31st December 2020

28th February 2021

Income Tax Returns (Tax Audit) 31st January 2021 31st March 2021

Do you think such a demand for further extending the due dates for Tax Audit, Transfer Pricing Audit, and Income Tax Returns should be met by the government? Let us know in the comments section below.


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