As per the survey, 41 percent of small businesses said it would be difficult for them to file tax returns on earnings by 31 December. The deadline for filing of tax returns as a result of the Covid pandemic has also been extended by the authorities. The survey was conducted by LocalCircles to interpret the pulse of taxpayers aligned with the Income Tax Return filing by December 31, 2020. It also attempted to understand the role of small businesses in submitting their ITR and audit report for FY 19-20 by the specified deadline. The survey of individual taxpayers received an additional 6600 responses, while the survey of small businesses received more than 2300 responses. Due to the Covid pandemic and subsequent lockdowns within the country, the final date for submitting the ITR (earnings tax return), which is usually on 31 July of each year, was extended. By December 25, 2020, more than 4 crore ITRs for AY 2020-21 for individual taxpayers have been submitted. Failure to file an ITR by 31 December 2020 could result in a minimum fifty percent penalty or a maximum of 200 percent of the tax imposed is likely to be levied on taxpayers, LocalCircles said. 'Due to the COVID-19 pandemic with lockdown for the months of April-May and the incredibly slow duration from June to August, small businesses had a very tough year this year as economic activity and market demand were significantly impacted. It was only after September that signs of uptick in market activity appeared and it was about recovering some of the accumulated losses from March to August this year for many small businesses. There is also reliance on GST returns for several small businesses, and company returns are usually more complex than individual returns, and for several of them, they need many sessions and exchanges of information with their accounting professionals, which has become difficult due to the pandemic. Small businesses are keen to extend the deadline to Feb 28, 2021 and to Jan 31, 2021 at the very least,' the survey said.
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