Income Tax Return Filing Deadline Extension for FY 2024-25 (AY 2025-26).

 

On May 27, 2025, the Central Board of Direct Taxes (CBDT) announced a significant extension of the income tax return (ITR) filing deadline for the Financial Year (FY) 2024-25, corresponding to the Assessment Year (AY) 2025-26, from July 31, 2025, to September 15, 2025, for non-audit taxpayers. This decision, affecting millions of taxpayers across India, including individuals, Hindu Undivided Families (HUFs), and partnership firms not subject to tax audits, has been met with widespread relief. The extension, prompted by structural changes in ITR forms, delays in system updates, and stakeholder concerns, marks a notable departure from the standard July 31 deadline, which had been adhered to strictly in recent years post-COVID-19 disruptions. This article explores the reasons behind the extension, its implications for taxpayers, the challenges faced during the filing process, and the broader context of India’s evolving tax administration system, aiming to provide a thorough understanding of this development.

Background: The Importance of ITR Filing in India

Income tax return filing is a cornerstone of India’s tax compliance framework, mandated under the Income Tax Act, 1961. It serves multiple purposes: it ensures transparency in financial dealings, enables taxpayers to claim deductions and refunds, facilitates access to financial services like loans, and helps the government monitor taxable income. For FY 2024-25 (AY 2025-26), taxpayers are required to report income earned between April 1, 2024, and March 31, 2025. The Assessment Year, spanning April 1, 2025, to March 31, 2026, is when this income is assessed and taxed.

Typically, the deadline for non-audit taxpayers—those not required to undergo a mandatory tax audit under Section 44AB—is July 31 of the assessment year. For FY 2024-25, this was initially set for July 31, 2025. However, the CBDT’s decision to extend this to September 15, 2025, reflects a pragmatic response to systemic and practical challenges, ensuring taxpayers have sufficient time to comply accurately.

Reasons for the Extension: A Multi-Faceted Rationale

The CBDT’s press release on May 27, 2025, outlined several key reasons for the extension, which can be broadly categorized into structural, technical, and practical considerations. These factors highlight the complexities of modernizing India’s tax filing infrastructure while balancing taxpayer convenience.

1. Structural and Content Revisions in ITR Forms

The ITR forms for AY 2025-26 underwent significant revisions to simplify compliance, enhance transparency, and ensure accurate reporting. According to the CBDT, these changes included:

• Allowing salaried individuals and small business owners with long-term capital gains up to ₹1,25,000 to use simpler forms like ITR-1 or ITR-4.

• Revising the capital gains schedule to reflect new tax rates effective from July 23, 2024, including taxing gains from unlisted bonds and debentures as short-term capital gains.

• Mandating the specification of TDS section codes and removing the use of Aadhaar Enrolment IDs.

• Introducing new fields to accommodate changes in the tax regime, such as the increased standard deduction of ₹75,000 under the new tax regime.

These updates necessitated additional time for system development, integration, and testing of e-filing utilities. Unlike previous years, when ITR forms were typically released by February or March, the AY 2025-26 forms were notified later, delaying the availability of filing utilities.

2. Delays in TDS Statement Reflections

Tax Deducted at Source (TDS) statements, which employers, banks, and other deductors must file by May 31, 2025, are critical for taxpayers to verify their income and tax credits via Form 26AS and the Annual Information Statement (AIS). However, these credits often reflect only in early June, leaving a compressed window for accurate filing. The CBDT acknowledged that without an extension, taxpayers would face challenges reconciling their financial data, potentially leading to errors or incomplete returns.

3. Technical Challenges with the E-Filing Portal

The Income Tax Department’s e-filing portal, while significantly improved since its overhaul in 2021, faced technical glitches during the AY 2025-26 filing season. Taxpayers and professionals reported issues such as login failures, session timeouts, and data mismatches between AIS and Form 26AS. Additionally, the delayed release of utilities for ITR-2, ITR-3, ITR-5, ITR-6, and ITR-7—some of which were only available in July or August 2025—further constrained the filing timeline.

4. New ICAI Financial Statement Format

The Institute of Chartered Accountants of India (ICAI) introduced a new standardized format for financial statements for non-corporate entities, adding complexity to compliance. This required tax professionals to undergo training and update software, slowing down the preparation process. The Chandigarh Chartered Accountants Taxation Association (CCTAX) highlighted this as a significant hurdle, advocating for further extensions.

5. Stakeholder Feedback and Festive Season Disruptions

Tax professionals, including bodies like CCTAX, voiced concerns about the tight compliance calendar, exacerbated by monsoon disruptions and the festive season starting in late August 2025. These factors reduced the effective working time for accountants and taxpayers, particularly in regions affected by heavy rains. The CBDT’s extension was partly a response to these practical challenges, aiming to prevent a last-minute rush and ensure higher accuracy.

Implications for Taxpayers: Benefits and Responsibilities

The extension to September 15, 2025, offers several benefits but also underscores the importance of timely compliance. Below is a detailed analysis of its implications:

Benefits of the Extension

1. Penalty-Free Filing Window: Filing by September 15, 2025, ensures taxpayers avoid late fees under Section 234F (₹1,000 for incomes below ₹5 lakh, ₹5,000 for higher incomes) and interest under Section 234A (1% per month on unpaid taxes). This is particularly beneficial for salaried employees and small business owners juggling multiple income sources.

2. Carry-Forward of Losses: Taxpayers with losses from sources like the stock market or businesses can carry them forward to offset future income, provided they file by the extended deadline. Missing this date forfeits this benefit.

3. Higher Refund Interest: For taxpayers due refunds, the extension increases interest under Section 244A by up to 33%, as interest accrues from April 1, 2025. However, this interest is taxable and must be reported in the ITR.

4. Time to Choose Tax Regime: The new tax regime is the default for AY 2025-26, but taxpayers can opt for the old regime by filing Form 10-IEA by September 15, 2025. Missing this deadline mandates the new regime for late filers, potentially affecting tax liability.

5. Enhanced Accuracy: The additional 46 days allow taxpayers to verify TDS entries, reconcile data with Form 26AS and AIS, and consult professionals, reducing the risk of errors or notices from the Income Tax Department.

Responsibilities and Risks

Despite the extension, taxpayers must remain proactive:

• Self-Assessment Tax Deadline: The payment of self-assessment taxes remains due by July 31, 2025. Late payments attract interest under Sections 234A, 234B, and 234C, increasing the tax burden.

• Belated and Revised Returns: If the September 15 deadline is missed, taxpayers can file a belated return by December 31, 2025, subject to penalties and interest. Revised returns to correct errors are also allowed until December 31, 2025. Updated returns (ITR-U) can be filed until March 31, 2030, with additional tax liabilities of 25%–70%.

• PAN-Aadhaar Linking: Linking PAN with Aadhaar is mandatory for filing. An inoperative PAN blocks ITR submission, emphasizing the need to complete this step early.

• Choosing the Right Form: With revised ITR forms, selecting the correct form (e.g., ITR-1 for salaried individuals, ITR-2 or ITR-3 for complex incomes) is critical. Consulting a chartered accountant is advisable for those with capital gains or foreign income.

Broader Context: Evolution of India’s Tax Administration

The 2025 ITR deadline extension reflects broader trends in India’s tax administration, which has undergone significant transformation in recent years. The introduction of the new tax regime under Section 115BAC, effective from AY 2024-25, aims to simplify taxation by offering lower rates without exemptions, though taxpayers can opt for the old regime for deductions under Chapter VI-A (e.g., Sections 80C, 80D). The increased standard deduction of ₹75,000 under the new regime, announced in Budget 2024, reduces tax liability for salaried individuals, but requires careful planning to maximize benefits.

The CBDT’s focus on digital infrastructure, including pre-filled ITR forms and real-time TDS matching, aims to streamline compliance. However, the delayed release of utilities and portal glitches highlight ongoing challenges in scaling this infrastructure to handle over 10 crore taxpayers, including a growing number of first-time filers and those with foreign assets. The extension also aligns with judicial precedents, such as the Gujarat High Court’s 2021 ruling, which emphasized the need for timely availability of ITR forms and utilities by April 1 of the assessment year.

Calls for Further Extension: A Contentious Debate

As of August 25, 2025, only 3.67 crore ITRs had been filed for AY 2025-26, compared to over 9 crore in the previous year, raising concerns about a potential last-minute rush. Tax professionals, including CCTAX and CA Himank Singla, have urged the CBDT to extend the deadline further to October 30, 2025, citing persistent portal issues, delayed utilities, and the new ICAI format. The festive season and monsoon disruptions have added to the pressure, particularly for professionals handling multiple compliance tasks like GST and company law audits.

However, the CBDT has not yet signaled another extension, emphasizing the need for taxpayers to file early to avoid penalties and portal congestion. Experts argue that while the September 15 deadline provides relief, systemic issues like utility delays and data mismatches warrant further consideration.

Practical Tips for Taxpayers

To navigate the extended deadline effectively, taxpayers should:

1. Start Early: Begin filing from April 1, 2025, using the e-filing portal’s pre-filled data to minimize errors. Early filing ensures faster refund processing.

2. Verify TDS Details: Cross-check income and tax credits with Form 26AS and AIS once TDS statements reflect in June 2025.

3. Consult Professionals: For complex incomes (e.g., capital gains, foreign assets), engage a chartered accountant to select the correct ITR form and optimize deductions.

4. Use Updated Utilities: Leverage the new Excel-based offline utility for ITR-1 and ITR-4 to validate returns and generate JSON files for upload.

5. Monitor Official Updates: Check the Income Tax Department’s website (www.incometax.gov.in) and reputable sources like ClearTax for notifications on further extensions or utility releases.

Conclusion: A Balancing Act for Compliance and Convenience

The extension of the ITR filing deadline to September 15, 2025, for FY 2024-25 (AY 2025-26) is a welcome move, addressing systemic challenges and stakeholder concerns. It reflects the CBDT’s commitment to balancing compliance with taxpayer convenience, particularly amidst significant changes in ITR forms and digital infrastructure. However, the extension also underscores the need for robust systems to handle India’s growing taxpayer base and complex reporting requirements.

For taxpayers, the additional 46 days provide a critical window to file accurately, avoid penalties, and maximize benefits like loss carry-forward and refund interest. Yet, the onus remains on individuals to act promptly, verify data, and comply with tax payment deadlines to avoid interest charges. As India’s tax administration evolves, the 2025 filing season serves as a reminder of the importance of adaptability—both for taxpayers navigating new rules and for the government striving to enhance transparency and efficiency.