ITR Deadline Extension Due To Portal Glitches Led To Penalty On Service Provider: Government

The managed service provider operating the Income Tax Department’s (ITD) e-filing system was penalised during financial year 2025-26 after technical problems attributable to it led to an extension of an income tax return filing deadline, the government has told Parliament.

In a written reply in the Lok Sabha on July 20, 2026, Minister of State for Finance Pankaj Chaudhary said the service provider is liable to pay a penalty when an ITR due date or another pre-announced date has to be extended for reasons attributable to it.

The statement came in response to questions from MP Shyamkumar Daulat Barve on recurring glitches, login failures and contractual accountability.

The reply did not disclose the amount of the penalty. It also did not announce any fresh extension of the current ITR filing deadline for assessment year 2026-27.

Previous Delays And Outages Drew Penalties

The government said contractual action had been taken against the managed service provider on several grounds connected with the Integrated e-Filing and Centralised Processing Centre 2.0 project, according to a recent report by Upstox.

The project was originally scheduled to be deployed for taxpayers in July 2020. As the service provider could not deliver it within the agreed timeline, liquidated damages were imposed.

Its performance is also assessed through quarterly service-level scores, which take into account factors such as prolonged non-functioning and operational lapses. Penalties were imposed for lower performance scores across 12 quarters, the minister said.

A separate penalty was levied in financial year 2025-26 for an application outage during the peak filing period. Under the contract, the provider is expected to maintain the portal’s performance and make efforts to prevent outages, particularly when return filing activity is at its highest.

Portal Faces Sharp Rise In Taxpayer Traffic

The government maintained that the e-filing portal has remained largely stable and efficient during the ongoing peak period, despite a steep increase in traffic. It acknowledged that some taxpayers could experience slower responses or intermittent delays when a large number of users access the system simultaneously.

Between July 8 and July 14, 2026, daily ITR filings increased from 8.38 lakh to 12.21 lakh. On July 14, the portal recorded nearly 98.87 lakh logins, compared with around 67.67 lakh on the corresponding date in 2025.

The combined number of ITR filings, logins, challan generations and Form 26AS views or downloads reached about 1.61 crore on July 14, 2026, against 95.34 lakh a year earlier.

The portal’s functioning is being tracked through daily and hourly dashboards covering logins, returns filed, Annual Information Statement redirections, payment gateway status and error codes. Reported technical problems are taken up for identification, escalation and resolution within a defined timeframe, the government said.

Taxpayers should therefore continue preparing their returns based on the notified due date rather than assuming that technical complaints will automatically result in an extension.

FAQs

1. Why was the Income Tax portal’s service provider penalised?

The provider was penalised for delays, outages and performance failures, including technical issues that led to an extension of an ITR filing deadline.

2. Has the government announced a fresh ITR deadline extension?

No. The parliamentary reply did not announce any extension for assessment year 2026-27, so taxpayers should follow the currently notified due date.

3. What should taxpayers do if the e-filing portal is slow?

They should avoid waiting until the last day, keep records or screenshots of errors, and retry during non-peak hours while continuing to follow the notified deadline.