BCAS Tax Knowledge Sharing Series

Extension of due date for filing tax returns – Why I oppose it
By CA Sanjay Visanji Chheda

Just as it happens every year, this year too, yet another due date (31st July) came. Yet again, as it happens every year, many people cribbed and yet again, the due date was extended by the bureaucrats for 5 precious days. But many people were overjoyed with this extension and flooded all the Social Media Platforms as if this was a major achievement.

This makes me wonder how long we professionals will keep on complaining and seeking extensions. It’s high time, we introspect as to why we professionals find ourselves in a situation where we have to constantly complain and/or seek extensions of various due dates. Have we ever wondered how this pleading for extension again and again is tarnishing our image as professionals? And most importantly, have we ever thought whether such extensions have actually ever helped us mentally, physically or financially. To me, the answer to all questions is a clear cut NO!

I take this opportunity to share some of my thoughts on these matters.

1. Why do we seek extension of due dates?

Let’s check and answer this question to ourselves - whether it has ever happened that we have been left with tax returns for those clients who submitted details well within time? The answer to this, in all probability will always be a big No! We are mostly stuck with returns of clients who either didn't give information properly or woke up at the last moment (in my articleship days, we used to call such clients ).

These clients either had other priorities or deliberately delayed in taking some decisions and finally we and our team (and indirectly family members of each such person) have to bear this stress for no fault of ours.

In fact, if we think ethically, are these extensions not punishment for those who abide by the law, follow all rules and obey all the deadlines and all the due dates? Such extensions without any hard ship or financial penalty to late comers are an indirect form of punishment for those who always fall in line.

2. Financial Impact

Let us revisit each such due date extension and introspect as to whether any such extension helped us financially. Here too, in my opinion, the answer is a clear No. In fact, it has affected all our planning and we and our team have ended up doing same work for same fees at cost of some work which we had planned in extended time. In fact, there is notional or rather actual loss because of the opportunity cost that is incurred as a result of such extensions.

I still remember that last year, due date for Audit / Tax Audit cases was extended by 16 days, i.e. from 30th September to 16th October, and yet I filed two large corporate returns exactly on 16th October 2016. So what did I and my team achieve by doing so? We just helped these clients to play with their ideas, whims and options for another 16 days and the entire team was busy for 16 days, just filing two I. T. Returns which could have been closed on 30th September whereas in the same time, we could have taken up some other assignment.

3. Impact on Quality

I strongly believe and most of you would agree that any work done under pressure leads to errors, omission and mistakes as compared to work done with a cool mind, less pressure and more focus on quality rather than disposal.

Whenever any one of us starts working under pressure of such due dates for our “Late Latif” clients, we end up making silly, avoidable mistakes, which normally we would never commit if such work is done in a planned manner with reasonable time on hand.

4. Work / Life Balance

We professionals always have a long laundry list of due dates to be followed, observed, maintained and reminded to team as well as clients. When we say to wife or family member about any of our due date, what is answer that we get?

They simply smile and sigh and comment - “in which month of the year, you don’t have pressure?”

They are right. With advent of smart technologies, efficiency has increased, but so has complexity, so has compliance burden and so has requirements and expectations of client as well as statutory authorities. Hence, this pressure.

5. System Issues

Let’s discuss very frankly, as to whether I. T. System was at fault or whether there were any changes in the Form or last moment clarifications. In my opinion, except for one issue of linking of Aadhar to PAN Card, there was no other trouble as such in I. T. System or Website or its Filing Server.

One of the major reasons for System Issues on any statutory Website, be it MCA, Income Tax, VAT or RERA is last moment pressure. In fact, authorities like MCA keep requesting people to avoid last minute rush and start filing returns in time. However for one or the other reason, final pressure comes in last week on any such website.

Let’s introspect about this one fact of Server or Website or Utility Capacity. Let’s ask few questions to ourselves:

a. When we host party at home, can we handle, if all guests take plate at same time? (Don’t we handle it diplomatically, saying first senior citizens, then kids, then ladies and then gents?)

b. Same way, do we expect that a local train leaving at 6.15 from Churchgate station will take the load of all the offices that close at 6?

c. One more example of our school days. Despite the bell ringing in common for the entire school, whether all classes used to get down in one go or we used to leave in order of Bus No. to avoid rush on staircase or gangway?

If we follow such discipline in our non professional life, then in similar way, why and how can we expect the I. T. System to work fully functional when lakhs of tax payers from all over the country want to file their return in the last seven days only?

How to handle / avoid such situations?

1. Bring discipline among your clients. Ask them to compile and submit data in timely manner, may be quarterly, half yearly or immediately on close of the financial year instead of getting all the data in the last month. 

2. Send regular reminders to clients for data and use same email in trail for sending follow up reminders from time to time and more importantly – do this right from the close of the financial year till the due date so that in case of any delay, you cannot be held responsible.

3. Keep differential pricing for clients who submit data in last month. This is somewhat tough, but it will work, at least from next year. (Yes. I am sure that next time he won’t be late, but some other client may come in the last week and will be there to fit in to the category of the )

4. Keep filing returns which are ready. This way, we don't employ staff just for last month, but whole year. And we must expect a similar treatment from the Income-tax department too. It is unfair to expect any system in the world to help you if there is a huge pressure at the last minute.

5. Last but not the least

If any system glitches are there or there are last minute changes or haphazard clarifications, we need not rush for seeking extensions. Each industry, each trade has their Association, Trade Body, etc. Either they should file for extension or at least they should join hands with professionals in filing requests for extension. I have noticed that in general, none of the Trade Associations has ever come forward and joined hands with professional bodies in seeking extension of due dates.

This brings the important question to the fore - for whom are we asking for extension? Not for us, not for Government. We are asking for extension for clients whose returns are affected and delayed either because of fault of client or a lapse on the part of the Government, but in any case, no fault of ours. Then why do we, professionals need to keep complaining?

And finally while concluding and frankly speaking, seeking extension is more often than not damaging our image as professionals. Asking for extra time, whether in school or college days or even in professional life, leaves an impression that we are either inefficient or bad planners or poor executors. 

I agree that very often, we have reasons like system issues, technical glitches, lack of clarity or doubts about constitutional validity etc. But then, we should ensure that trade associations/bodies/forums representing our clients, who are affected due to all these issues either file the request on their own or join hands with professional bodies and ask for a justified and valid extension.

While I am completing this article, I have already come across several posts on social media from a few CAs seeking extension of time for tax audit and other audit cases for which the due date for filing tax returns is 30th September! To me, this is really shocking.