Almost Half Of Taxpayers Yet To File ITR; Many Find It Difficult To Meet deadline: Report Reveals Reasons

As the deadline for filing Income Tax Returns (ITR) for assessment year (AY) 2024- 25 approaches on July 31st, lots of taxpayers and tax professionals are writing on LocalCircles and other social media platforms about encountering issues like login failures, unresponsive pages, timeouts, and problems reflecting pre-filled data and uploading large files. Inconsistent calculations for capital gains and foreign income tax have also been reported, as well as instances where filings were not reflected in records after submission, according to a LocalCirles research report issued on Thursday.

So far, 49 per cent of taxpayers are yet to file ITR. 29 per cent of taxpayers are saying that it’s very difficult to file by July 31 deadline. They are citing difficulties with the ITR website as the top reason.

Also Read: Budget 2024-25: Sitharaman Proposes Revised Tax Structures Under New Tax Regime

“With just a few days left to file ITR by July 31, taxpayers are worried and have been using social media to air their difficulties in filing the returns and have been urging the government to extend the deadline. Several chartered accountant associations, including the Institute of Chartered Accountants of India (ICAI), and Karnataka CA Association among others are reported to have formally written to the Income Tax Department about the various problems and sought an early resolution of the technical problems and extension of the deadline for filing the returns,” according to the research report.

The research was conducted as a pan-India survey to find out where taxpayers stand on filing their tax returns and the issues experienced. The survey received over 38,000 responses from taxpayers located in 311 districts of India. 69 per cent respondents were men while 31 per cent respondents were women. 43 per cent respondents were from tier 1, 26 per cent from tier 2 and 31 per cent respondents were from tier 3 and 4 districts.

How Individuals Who Must File ITR Are Faring: The survey asked them, “How are you positioned to be able to file your individual income tax returns for FY 2023-24 by the current deadline of July 31, 2024?” Out of 19,865 who responded to the question 48 per cent stated that they had “done it already”; four per cent stated that they “have tried but had difficulty in filing. Will try again and file by July 31, 2024”; 16 per cent of respondents stated they “haven’t done it yet but will comfortably do before July 31, 2024”; 18 per cent of respondents stated that they “haven’t done and it will be significant effort doing it before July 31, 2024”; 11 per cent of respondents stated that it will be “impossible to file by July 31, 2024”; and two per cent of respondents did not give a clear answer. To sum up, 49 per cent of income taxpayers surveyed are yet to file the return; 29 per cent of them say it will be difficult to file FY 23-24 returns by July 31.

The survey next asked taxpayers, “What are the different bottlenecks in filing your income tax return for FY 2023-24 by the current deadline of July 31, 2024?” Some among 18,139 respondents to the question indicated more than one reason for not being able to meet the deadline with 38 per cent stating that they are “getting the tax filing portal to work (directly or indirectly}”; 38 per cent stated that time is a constrain so they are “just getting to doing it amongst other priorities”; 14 per cent of respondents indicated that they are still “getting Form 16 and other documents”; 14 per cent stated that the “CA is reporting having difficulties”; three per cent stated that they are “unable to get time with my CA” and 14 per cent of respondents stated that there are “other issues” not mentioned. In essence, four in 10 who have not filed their ITR for FY 2023-24 cite difficulties with the tax portal as the reason.

Overall, 49 per cent of income taxpayers surveyed are yet to file their return for FY 2023-24 while 29 per cent of them say it would be difficult to do so by July 31. The main reason cited by four in 10 who have not filed their ITR for 2023- 24 is difficulties with the tax portal. Given the prevalence level of issues with the portal reported this year, unless something is likely to change within the next 48 hours on the portal stability front, the Income Tax Department may want to consider extending the filing deadline to August 15 or August 31, 2024.