The Centre has confirmed that the managed service provider (MSP) for the Income Tax Department’s e-filing portal has faced multiple contractual penalties over delays, application outages and poor service performance, even as it maintained that the platform has been functioning “in a largely stable and efficient manner” during the peak income tax return (ITR) filing season.
Responding to a question in the Lok Sabha on complaints related to technical glitches, data processing errors and login failures on the e-filing portal, Minister of State for Finance Pankaj Chaudhary, in a written reply on July 20, said the portal is a “high-volume digital platform, servicing crores of Indian taxpayers,” with usage rising significantly as statutory deadlines approach.
According to the minister, the portal has seen steady usage over the years, with data from July 8-14, 2026 showing substantially higher activity than the corresponding period in 2025.
Chaudhary said, “Given the high scale of concurrent access in the peak filing period, some taxpayers may, at times, experience transient technical issues such as slower page response or intermittent delays during periods of peak concurrent load.”
However, he added, “Despite the substantial increase in load, the e-Filing portal has been functioning in a largely stable and efficient manner during the ongoing peak filing period, with performance being monitored on a continuous basis through a dedicated daily and hourly monitoring dashboard tracking logins, ITR filings, Annual Information Statement (AIS), payment gateway status, error codes and other operational indicators.”
The Minister also said the government has undertaken several technical and structural measures ahead of the peak filing period.
“The e-Filing ecosystem has been comprehensively strengthened and performance-tested to support peak filing volumes, with validated capacity to handle up to 1 crore ITRs per day, ensuring sufficient headroom beyond the projected peak demand,” Chaudhary said.
In addition, the Minister said the MSP is contractually liable if the due date for filing income tax returns or any other pre-notified deadline has to be extended for reasons attributable to the service provider. It added that penalties on this count were also imposed during FY 2025-26.
Government details contractual penalties imposed on MSP
According to Chaudhary, the government has imposed contractual penalties on the relevant Managed Service Provider (MSP) for multiple lapses related to the e-filing portal. Here’s what the minister said in a written reply:
- As per the original schedule, the MSP was required to deploy the IEC 2.0 project (eFiling portal is part of the IEC 2.0 project, i.e. ‘Integrated e-Filing and Centralised Processing Centre 2.0’ project), for use of taxpayers, in July 2020, but the MSP could not deliver the project in time. Hence, a penalty in the form of ‘liquidated damages’ was imposed upon the MSP.
- The performance of the MSP of IEC 2.0 is mainly ascertained through Service Levels Score, including prolonged non-functioning and operational lapses. Service Levels Score is measured quarterly, and penalties for the lower performance score over 12 quarters have been imposed on the MSP.
- As per relevant provisions of the contract, the MSP has to make all efforts to maintain application performance levels of the e-filing portal and avoid application outage, especially during peak filing period. A penalty for an application outage during the peak period in e-filing services has been imposed on the MSP for FY 2025-26.
- MSP is liable for penalty if the due date of ITR filing or any other pre-notified date gets extended on account of any reasons attributable to the MSP. Penalty on this count has been imposed upon the MSP in FY 2025-26.
