Infosys is once again under the microscope after it was confirmed that the company was penalised for an inadequate filing portal by the Income Tax Department. This has also brought back the question of whether taxpayers will be subjected to another extension of the filing deadline for income tax returns.
Although the government has extended ITR deadlines in the past for technical issues and exceptional circumstances, officials have said that the time is not on the table for such an extension, and taxpayers have to submit their ITRs as per the timeline.
Why was Infosys Penalised?
Infosys was awarded the contract to develop and maintain the Income Tax Department’s next-generation e-filing portal, a platform designed to simplify tax filing, speed up refunds, and improve the overall taxpayer experience.
But the portal has been criticized for technical glitches, slow performance, login issues, uploading returns, and intermittent service failures since it was launched. These issues affected taxpayers, chartered accountants, tax professionals, and businesses that depended on the platform during peak filing periods.
According to the report, contract provisions allowed the government to impose financial penalties if service-level standards were not met. The reported penalty is a result of performance-related provisions in the contract and not fraud or criminal wrongdoing on the part of Infosys, according to the report.
Government officials had constantly pushed for improvements to the portal, saying taxpayers should not experience inconvenience while complying with tax obligations. After watching the project's progress again, the contractual penalty was imposed, the report said.
Impact on Taxpayers
The technical issues experienced in earlier filing seasons led to the delay of taxpayers' attempts to submit returns or access tax-related services while filing, as the technical problems with earlier filing seasons were frustrating for many taxpayers. Some users encountered difficulties in downloading forms, checking returns, receiving acknowledgements, or responding to notices.
The Income Tax Department and Infosys shortly thereafter introduced several upgrades and fixes to improve portal stability, increase system capacity, and overall user experience.
The filing season in recent years has been more or less smooth, and the number of users still report isolated technical problems during times of high traffic; however, they do report on some of them.
Why Another ITR Deadline Extension May Not Happen?
Tax experts believe that another blanket extension of the ITR filing deadline is unlikely unless extraordinary circumstances arise.
These are all arguments in favor of this view.
Improved portal performance: The e-filing portal is less prone to glitches, and the deadline extension is less likely. Administrative planning: Tax filing schedules are linked to refund processing, assessments, audits, and government revenue planning. The times of extension can disrupt these timelines. Advance communication: The Income Tax Department encourages taxpayers to file well before the last date to avoid last-minute congestion. Very limited justification: unless a major technical outage occurs and huge changes impact taxpayers across the country, authorities prefer the set deadlines.
But for years, officials have advised taxpayers not to wait until the last days of the filing window because the high traffic can lead to longer response times even on a well-functioning portal.
What Taxpayers Should Do
Taxpayers should verify all income details, reconcile information with Form 26AS and the Annual Information Statement (AIS), choose the appropriate ITR form, and file returns well before the due date. After filing, it is equally important to complete the verification process within the stipulated period so that the return is treated as valid.
Those who are experiencing technical problems should document the problem via screenshots or error messages and use the grievance mechanism on the Income Tax Department's portal to complain if necessary.
Looking Ahead
The reported penalty on Infosys underlines the government’s expectations that critical digital public infrastructure must be reliable and perform well. As India’s tax administration becomes increasingly digital, providing affordable online services to millions of taxpayers is even more important.
At the same time, the possibility of another extension of the ITR filing deadline seems limited under normal circumstances. Better and more reliable than in the early days of the portal, taxpayers should not wait for such an extension but file their returns in the prescribed time to avoid late fees, interest, and other compliance-related problems.
