Hinckley and Bosworth Borough Council say the Hinckley crematorium on the A47 will not be open in February 2021.
A report for the Borough Council, which plans to run the facility, says an extra £3.4million could be needed to build and complete the facility.
It is now predicted that the site off the A47 between Hinckley and Earl Shilton will open in August 2021.
The council says it expects the site to carry out 1000 cremations a year, revised up from 800.
A report updating the progress of the project states:
"The total new capital cost, including contingency elements, equals £ 6,639,401 and with costs already included, this is a total capital cost of £6,914,215. This is an increase in the budget of £1,943,190 and will reduce the level of return. The current expectation, if the contractor is given the project by mid July 2020, is the crematorium will be operational as from the 1 August 2021."
An additional £1.4m of costs could be due if the council exceeds the VAT threshold on the project.
The council plans to run the crematorium with estimations that it could generate in the region of £800,000 per year.
The report also said councillors could consider alternative options to reduce costs, such as selling the site to an operator, or arranging a partnership, similar to how Hinckley Leisure Centre is managed.
The site will be come the fifth crematoria in Leicestershire with others at Loughborough, Great Glen, Countesthorpe and in Leicester.
The nearest crematorium, in Nuneaton, carried out 2098 cremations in 2019 each at a fee of £1070.00.
The proposed crematorium development in Hinckley is intended to reduce waiting times for services and reduced travelling times for Hinckley and Bosworth residents.
A preferred contractor has been chosen to build the crematorium and is due to be instructed.
Officials estimate the project will take 50 weeks to complete and due to open in August 2021.
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