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• The Central Board of Direct Taxes (CBDT) has extended the corporate tax filing deadline to November 15 for the assessment year 2024-25.
• The extension comes as direct taxes' contribution to total tax revenue reached 56.7 per cent, the highest in 14 years.
• An increasing number of taxpayers are opting for the new tax regime, indicating a shift towards simplicity and potentially lower rates.
• The e-filing process and support from the Income Tax Department have played a crucial role in facilitating the smooth filing of ITRs for AY 2024-25.

In a significant move, the Central Board of Direct Taxes (CBDT) has extended the deadline for filing income tax returns by corporates by 15 days, pushing it to November 15 for the assessment year 2024-25. The original deadline was October 31. This decision was announced in a circular released by the CBDT, stating that the extension applies to the return of income for the assessment year 2024-25 under the Income-tax Act, 1961.

This extension is expected to ease the filing process for corporates during the festive season. Experts believe that this move will allow taxpayers and professionals to prioritize accuracy and compliance without the stress of last-minute filings amidst celebrations. The CBDT's decision aligns with its ongoing efforts to enhance taxpayer compliance while ensuring that individuals have adequate time to meet their obligations.

Tax Collection and Compliance

The extension comes at a time when the contribution of direct taxes to total tax revenue reached 56.7 per cent in AY24, the highest in 14 years, according to a recent SBI report. This increase signifies a strengthening of the progressive taxation system in India, indicating better compliance, a broader tax base, and potentially a healthier economy.

The total number of Income Tax Returns (ITRs) for AY 2024-25 filed till July 31, 2024, was more than 7.28 crore, which was 7.5 per cent more than the total ITRs for AY 2023-24 filed till July 31, 2023. This surge in ITR filings indicates that taxpayers and tax professionals have been making their compliances in time.

Shift Towards New Tax Regime

Interestingly, an increasing number of taxpayers have opted for the new tax regime this year. Out of the total ITRs, 5.27 crore were filed in the new tax regime compared to 2.01 crore ITRs filed in the old tax regime. Thus, about 72 per cent of taxpayers opted for the new tax regime, while 28 per cent continued to be in the old tax regime.

The preference for the new tax regime suggests a shift in taxpayer behavior towards simplicity and potentially lower rates over deductions. This trend may prompt the government to consider the long-term sustainability of the old tax regime. If the preference for the new regime persists, it could indicate a future where the old regime is phased out or significantly reformed.

The government's strategy to attract the salaried class to the new tax regime offers particular benefits to individuals in lower tax brackets who may not have the means to invest and, therefore, miss out on deductions available under the old regime. This shift towards a more straightforward and efficient tax system in India could involve simplifying tax laws further and ensuring a smooth transition for taxpayers, while also focusing on enhancing revenue collection through improved compliance rather than numerous exemptions.

E-filing and Taxpayer Support

The e-filing process and support from the Income Tax Department have played a crucial role in facilitating the smooth filing of ITRs for AY 2024-25. The department's efforts, including focused social media campaigns, informational videos in multiple languages, and an efficient e-filing portal, have encouraged early filing and improved taxpayer understanding. The e-filing Helpdesk's prompt handling of queries and the system's ability to manage high traffic without major glitches demonstrate an enhanced taxpayer support system.