Infosys Faces Financial Penalties for E-Filing Portal Issues

Financial Penalties Imposed on Infosys

The Indian government has confirmed that Infosys, the managed service provider for the Income Tax Department's e-filing portal, incurred financial penalties during the fiscal year 2025-26. This was due to technical difficulties on the platform that necessitated an extension of the income tax return (ITR) filing deadline. Union Minister of State for Finance, Pankaj Chaudhary, disclosed this information in a written response to a Lok Sabha query on July 20, 2026. He stated that the penalties were a result of issues linked to the service provider that compelled the government to extend statutory deadlines. "The MSP is liable for penalties if the due date for ITR filing or any other pre-announced date is extended due to reasons attributable to the MSP. Penalties have been imposed on the MSP for FY 2025-26," Chaudhary noted.

Additional Penalties Against Infosys

In addition to the penalties related to the ITR filing deadline extension, the government informed Parliament that Infosys faced several actions due to delays and service deficiencies under its contract. Notably, the delayed launch of the Integrated e-Filing and Centralised Processing Centre (IEC) 2.0 project was highlighted. The minister mentioned that the MSP was subjected to "liquidated damages" for not delivering the taxpayer-facing project by the originally scheduled date of July 2020. Furthermore, penalties were imposed over a span of 12 quarters as the MSP failed to meet the required service-level performance benchmarks, which included assessments of operational shortcomings like prolonged outages.

Government's Stance on Future ITR Deadline Extensions

Addressing concerns regarding potential future extensions of the filing deadline, Chaudhary explained that the Central Board of Direct Taxes (CBDT) portal experiences extremely high traffic, especially as statutory due dates approach. He noted that the platform caters to millions of taxpayers, with user activity surging significantly in the final days before deadlines. "Given the high volume of concurrent access during peak filing periods, some taxpayers may occasionally face transient technical issues such as slower page responses or intermittent delays," he stated. However, he assured that the portal has remained largely stable during the current filing season, supported by a comprehensive monitoring system to swiftly identify and resolve technical issues.

Improvements to Portal Performance

The Finance Ministry reported that the e-filing portal is under constant surveillance through dedicated daily and hourly dashboards that monitor key operational metrics. These metrics include taxpayer logins, ITR filings, Annual Information Statement (AIS) access, compliance portal redirections, payment gateway status, error codes, and other system indicators. The government also emphasized that every technical issue reported on the portal is escalated and addressed within set timelines to minimize disruptions for taxpayers. Chaudhary further informed the Lok Sabha that activity on the income tax portal has been steadily increasing over the years. Data comparing portal usage from July 8-14, 2026, to the same period in 2025 shows a significant rise in taxpayer activity, indicating the growing demand on the digital infrastructure.

For taxpayers filing returns in the current assessment year, the due dates remain unchanged. ITR-1 and ITR-2 for salaried individuals and those with capital gains are due by July 31, 2026. ITR-3 and ITR-4 for non-audit business cases must be submitted by August 31, 2026, while audit cases have a deadline of October 31, 2026. Businesses needing transfer pricing reports have until November 30, 2026, and belated returns can be filed by December 31, 2026. Revised returns are allowed until March 31, 2027, and updated returns (ITR-U) can be submitted until March 31, 2031, subject to applicable provisions.