...that's the question I hate the most and also am asked the most!! In fact, anyone who is in the third/fourth year of his/her PhD faces this. Yet, that's the only dialogue anyone with a non-PhD/non-research background will indulge in with you. There are several people who this question.
First of all, those Chachas, Chachis, Mamas, Mamis et al will always pester you with these questions, especially if they have a son/daughter/son-in-law who has been working (mostly in a software company), say, for the last 3-4 years i.e. since when you started your PhD. The question is asked for either of two reasons: One. To make a comparison (by letting you subtly know that a comparison is being made) between you and this particular son/daughter/son-in-law. You always know that such a comparison is absolutely invalid but it's only you (and a very few others) who knows this fact. Two. There exists a female entity ('male' if you are a lady) who is to be married off this year and the Chachi/Mami somehow sees an ideal candidate in you (although the value of a PhD candidate in the Indian marriage market is quite low). Now, if you are already committed to someone, then you should easily deduce that the question is being asked for reason One.
Then there is the relative who has a son/daughter who has already finished his/her PhD (and by Murphy's law, almost in all cases, this person started his/her PhD with you if not after you). This question and the resulting pain seen on your face gives your relative a vicious happiness. Again, you know that a comparison between any two PhDs is not a fair one. But, it's again only YOU who knows that.
Third on the list is that confused entity who did not know what to do after graduation/Masters and ended up getting admitted in a PhD programme. This sinless character is interested in knowing your progress because he/she thinks that your answer will clear any self-doubt he/she holds. However, your answer won't do any good if you are in the, say, sixth year of PhD. In such a case, the rookie thinking goes something like this: " I surely won't take this long to complete! I shall start working really hard once my course-work gets over". The poor soul, however, is unaware of the fact that in a couple of years or so he/she is going to fall in the same ditch and will be asked the same question. But by then, he/she will have several people to blame for his/her slow progress: guide, guide, guide, guide......
Fourth: The shop-keeper near your home. He will ask you the same question but phrased differently: When will you start working? This guiltless person only knows that you are not yet earning and haven't still completed your education. He is worried about your parents, your wife (if you are married), your unborn kids (if you are unmarried). The baker near my house in Pune still thinks that I am taking some vocational course in ITI (for him, IIT = ITI). In fact, once he asked me why I was going to the ITI in Mumbai when there is an ITI in Pune. Well, explaining to him the progress of my PhD is 100 times more challenging than the problem I solved in my PhD.
Fifth: Your collegues, contemporaries...the fellow-PhD students...they ask the question with pure intent....they just want to really know when you'll be finishing.
Last but not the least: Your near and dear ones (read parents, better half/would-be). They will rarely ask you this question. But when they ask, you get down to work, with determination, with zest and sometimes with moist eyes....
Whether or not you answer the question, you shall someday put down your thesis and be called Dr.....so what if you take 4 yrs, 5 yrs, 6 yrs.......
Before signing off, yours truly would like to give a truth:
Under no circumstance and at not stage of your PhD, shall your Guide ask you, 'when are you planning to finish?' and shall keep mum (with a smirk) when you ask, 'when will I be finishing?'