ITR filing in new income tax bill: Many taxpayers want the permanent extension of ITR filing deadlines to get more time to meet the compliance laws

Will deadline for income tax filing change in the new income tax bill? The question arises: Will the new income tax bill 2025 change the deadlines for filing ITR and provide relief to taxpayers? Read on to know what sources say

The new income tax bill has been tabled in Parliament. In addition to simplifying the language of direct tax laws, many taxpayers anticipate the latest income tax bill will provide ease of compliance.
Has the new income tax bill changed the income tax return filing deadline to provide more time for taxpayers to file ITR?

ITR filing deadlines proposed in the new tax bill
According to sources, the new income tax bill has not changed the income tax return filing deadlines. The new income tax bill is likely to continue with the same income tax return filing deadlines.

Current income tax rules on ITR filing
There are different income tax return filing deadlines for various categories of taxpayers. Individuals and other taxpayers whose accounts are not required to be audited must file the original ITR by July 31 of the assessment year.

Taxpayers whose accounts are required to be audited must first submit the audit report by September 30 of the assessment year. Once the audit report is submitted, taxpayers must file ITR by October 31 of the assessment year.

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Taxpayers with international transactions must submit the audit report by October 31 of the assessment year. Once the audit report is submitted, taxpayers must file the ITR by November 30 of the assessment year.
An assessment year is followed by the financial year in which the income is earned.

If an individual misses the original due date of filing ITR, as mentioned above, they can file a belated return. According to current income tax law, the deadline to file a belated return is December 31 of the assessment year.

Similarly, an individual can file a revised return if a mistake is made in the original or belated ITR. The last date to file a revised return is December 31 of the assessment year.

A penalty of up to Rs 5,000 is applicable under Section 234F of the Income Tax Act for filing a belated return.

If an individual has not filed any ITR (original or belated), then they have the option to file the updated return. To encourage voluntary compliance, the government has introduced the facility of updated returns. Updated returns can be filed only in specified cases. The updated return can be filed only once the assessment year has ended. An updated return can only be filed if there is an additional tax liability in the ITR, i.e., it cannot be filed if an updated return results in lower tax liability, claiming or enhancing tax refund amounts, etc.

Why is there a need to provide relief in the ITR filing deadline

The taxpayers have been demanding ease in the ITR filing deadlines. Salaried individuals usually receive their Form 16 (TDS certificate) from their employer by June 15. Once they have received Form 16, they start collecting the other documents, as required, such as Capital gains statement, interest income statement, etc. Salaried individuals usually do not get more than 45 days to file income tax returns. Many tax experts believe this is a very short time to fulfil income tax compliance. Extending the deadline to file ITR by at least a month is necessary.

Individuals investing in foreign countries also face issues due to the revised return deadline ending on December 31. This is because many countries, such as the USA and Singapore, follow the calendar year as their tax year. It isn't easy to gather income and asset details for these countries before the revised return filing deadline of December 31.

For example, in the US, tax returns for the calendar year 2024 will be finalised only in April 2025. However, in India, the revised, belated returns can be filed for FY 2023-24 (AY 2024-25) only till December 31, 2024, to claim the credit for taxes paid from Jan to March 2024, which will be finalised only after the 2024 US tax return.

Hence, many residential individuals cannot claim Foreign tax credits in their ITR. They also miss out on the other tax benefits available under the Double Tax Avoidance Agreement (DTAA). Overseas tax returns are essential to claim Foreign Tax Credit (FTC) benefits.

Due to the non-availability of overseas tax returns, the FTC claims and DTAA relief would be based on the taxes deducted at source and income reported in payslips in the overseas country. This may lead to litigation in case of an audit by the Income tax department.

Also, there are penal implications under the Black Money Act and Income Tax Act on account of underreporting or mis-reporting of foreign income and assets.

This story originally appeared on: India Times - Author:Faqs of Insurances