The Central Board of Direct Taxes (CBDT) has granted taxpayers a welcome breather by extending the income tax return filing deadline from 31st July 2025 to 15th September 2025.
In the past, deadline extensions have been granted for various reasons, often following persistent representations had to be made in past by professional bodies and industry associations. While exceptional situations like the COVID-19 pandemic & natural calamities have played a role, a key recurring factor has been the delay in the release of updated ITR utilities reflecting frequent regulatory changes. Another major challenge taxpayers often face is the limited filing window – since TDS details typically appear on the portal only by the first or second week of June, leaving a narrow timeframe to file non-audit returns by the 31st July.
The CBDT, in its official press release, acknowledged the rationale behind the extension, stating that it is “expected to mitigate the concerns raised by stakeholders and provide adequate time for compliance, thereby ensuring the integrity and accuracy of the return filing process”. The move comes in light of extensive changes introduced in the notified Income Tax Returns (ITRs), which require sufficient system preparedness to ensure a smooth and error-free rollout of updated filing utilities.
Extensions for filing income tax returns provide taxpayers with additional time but come with both advantages and drawbacks.
The extension will be beneficial for taxpayers, particularly those dealing with capital gains reporting, which are taxed differently depending on whether the capital asset was sold before or after 23rd July, 2024. It provides additional time to understand the complexities of the newly introduced forms and associated compliance requirements. Moreover, small businesses, freelancers, and self-employed individuals who often face challenges in maintaining accurate financial records and navigating the intricacies of the tax filing process are likely to find this extension especially helpful. The extension can be seen as a supportive measure for taxpayers, particularly small businesses and individuals with limited access to tax-related assistance, helping them meet their filing deadlines more comfortably. It will also provide chartered accountants and tax practitioners additional time to manage the high volume of filings. Moreover, it offers a much-needed cushion to address technological and systemic hiccups faced by both taxpayers & authorities. The extended timeline allows taxpayers to resolve discrepancies in their records especially in TDS details & reconciliation of AIS/TIS reports, where data duplication is common. It may also help them avoid hefty fines and interest for late filing. Taxpayers elligible for a refund may find a silver lining in the form of interest payments. Under Section 244A of the Income Tax Act, the government pays simple interest at the rate of 0.5% per month (6% per annum) on the refund amount. This interest is calculated from April 1 of the relevant assessment year until the date the refund is issued. With the extension of the filing deadline, taxpayers may benefit from a higher interest payout, as the period for interest accrual gets extended.
However, certain issues may arise where taxpayers may not welcome the extension, especially if it leads to delays in processing refunds, thereby affecting their cash flows. From the government’s perspective, an extension could result in delayed tax collections. For tax consultants, it would mean an extended workload spilling into subsequent months, which could have otherwise been avoided.
There has been a consistent demand from various bodies representing taxpayers to extend the return filing deadline from 31st July to 31st August. Given the limited window between the availability of financial data & the filing due date, it is time the authorities seriously consider this request. Such an extension would reduce last-minute errors and compliance stress, benefiting both taxpayers and professionals. A more practical timeline could also lead to improved accuracy and increased voluntary compliance. Engaging professional help can also play a vital role in staying abreast of frequent regulatory changes and ensuring accurate, timely compliance.