Income Tax Return: Confusion delays ITR filing efforts of late filers

The filing of Income Tax Return (ITR) for the Assessment Year (AY) 2021-22 – that is for the Financial Year (FY) 2020-21 – could start only after the normal due date of July 31, 2021 due to technical issues in the new Income Tax Portal, resulting in postponement of several deadlines, including the due date of filing return to December 31, 2021 for those assessees whose incomes are not subject to audit.

As a result, due to postponement of the due date by 5 months, many assessees were confused if they had filed the return for the FY 2020-21 or not, especially after the due date got over in January 2022.

The taxpayers who, due to the confusion, failed to file their return within the due date of filing return, were awakened from their slumber by repeated messages from the Income Tax Department in March 2022, asking them to file the return latest by March 31, 2022.

Although the messages let the non-filers know that they are yet to file their return of income for the AY 2021-22, many of the assessees started gathering data for the FY 2021-22 – instead of FY 2020-21.

Take, for example, the case of Shiv Pal (name changed), who lost his job in August 2020, when the newspaper in which he was working stopped its publication. Thinking that the message to file ITR is for FY 2021-22, he was wondering why he should file the return without any income.

However, after fetching the relevant information from the Income Tax Portal after logging in, he was able to remember that he worked till August 2020 and taxes were also deducted at source (TDS) from the salary he got.

When he asked the financial institution – from which he has availed a home loan – to give a statement containing the figures of interest paid and principal repayment, to file the return for AY 2021-22, the institution provided him the statement for FY 2021-22 instead.

In another case, despite having rich experience in handling the compliance for her company as a seasoned Company Secretary, Ananya Gupt (name changed) got confused while meeting her own tax filing compliance. After revealing a mix of data related to FY 2020-21 and FY 2021-22 in her ITR for the AY 2021-22, she is now wondering if she will have to revise the return that she has just filed.

It appears that confusions are there even in the Income Tax Department – as in one case, the Self Assessment Tax paid on January 10, 2021 for the AY 2020-21 was appearing under FY 2020-21 in the Annual Information Statement (AIS).

With the time running out fast to complete filing of return for AY 2021-22 (FY 2020-21) by the midnight of March 31, 2022, such confusion makes the late filers nervous, that makes them even more confused.

To avoid such a situation, instead of sending repeated messaged at the fag end of AY 2021-22, the Income Tax Department should have informed them periodically soon after the due date of filing return got over on December 31, 2021.