E-filing of Tax Returns Demystified

Editor’s note: This blog post written by ‘Sanjay Kapadiaa, CEO, TaxSum.com

e-filing2bincome2btax-1546235In financial year 2010-11, a little over nine million people filed their returns online. This number is expected to rise to 20 mn in 2011-12 and touch 70.5 mn in 2016. The Central Board of Direct Taxes (CBDT) is also encouraging online filing of tax returns as this is a less cumbersome and speedy process as compared to physical filing.

With the deadline for filing tax returns pressing closer, those who have yet to begin filing any return because of the cumbersome process, starting through e-filing would be a good option. This article will explain the process of e-filing, associated benefits and clarify a few myths associated with the concept of e-filing to highlight why increasingly this will become the fastest and safest way to file income tax returns.
What is e-filing?The process of electronically filing Income tax returns through the internet is known as e-Filing. It is mandatory for Companies, Firms, Individuals and Hindu Undivided Family (HUF) requiring Tax Audit u/s. 44AB, to submit their returns electronically from A.Y. 2011-12. Any other taxpayer can elect to file Income Tax Return electronically at their option. One can file tax returns online with or without the use of a digital signature. However, this rule applies only to individuals. Companies are mandated to file tax returns online with the use of the digital signature.

Types of e-Filing …

There are two types of e-filing. Returns can be filed through e-filing portals like TaxSum.com with or without a Digital Signature –

• Option 1: Using digital signature

– In this case no paper return is required to be submitted

• Option 2: Without using Digital Signature

– After e-filing the return, ITR-V is received by the assessee

– Signed copy of ITR-V is to be sent to Post Bag No.1, Electronic City Post Office, Bengaluru, Karnataka-560100, by ordinary post within a period of 120 days of filing of return electronically.

– This is a single page receipt cum verification form.

Benefits of e-filing of Tax Returns

– Anywhere-Anytime Filing- No Personal Interface- Quick Processing- Direct Credit of Refunds- Return Tracking- Permanent Records

Traditional fling vs. E-filing fling of returns

Traditional (Paper Filing)

Logistics – Physical filing only at tax department officeConvenience – No so convenient any moreCost effect – Conveyance, Professional fees, Stationery etc.Time factor – Transportation, queuing for filing – involves more than 2 to 3 hoursHuman intervention – Very well knownSafety and security – All possibilities of temperingRefund process – When uploaded by the Department staff

Online Filing (E-filing)

Logistics – Filing from any where – Home, Office, Cyber CaféConvenience – Very convenientCost effect – Very much cost effectiveTime factor – Online filing possible in about 30 to 40 minute, any time from any whereHuman intervention – NoneSafety and security – NoneRefund process – Automatically by the Central Processing Centre of Government

Myths of e-filing

Myth 1: I need a Digital signature for e-filing the income tax return.

Reality: You need a digital signature only when you file your return completely online. You don’t need the same if you e-file your return and then post a signed ITR V form to the income-tax office in Bangalore. The new rule, which requires a taxpayer to send the ITR V by post within 120 days, has made the submission process very simple and convenient.

Myth 2: More chances of scrutiny for the electronically filed returns.

Reality: This is purely a fictitious assumption. Every year income tax department issues scrutiny guidelines and based on the same scrutiny notices are issued. Whether the person has filed income tax returns electronically or through traditional paper filing method have no bearing on the selection of a case in scrutiny. In fact, digital filing can help in automatically tallying Returns Particulars filed by you and that filed by your Employer, Banks and other Financial Institutions.

Myth 3: E-filing cost more while physical return doesn’t cost anything.

Reality: E-filing through the government site is free but it’s difficult to use in terms of usability as selection of appropriate forms and calculation of income does not happen automatically. Alternately a lot of people utilize the service of tax professionals and chartered accountants which may be much more expensive. Some private portals also offer filing facility like TaxSum.com. E-filing is also an environment friendly way.

Myth 4: Cannot revise the return if filed electronically.

Reality: E-filed returns can be revised in the same way as those filed in any other manner. All e-filing portals allow you to file revised tax returns.

Myth 5: E-filing is unsafe.

Reality: E-filing is done in a secured gateway for which security certificate is also obtained and thus making it fully secure.Hence, E-filing has made filing the return so simple and easy that any individual can file his return any time anywhere by just few clicks. In addition, e-filing enables quick processing of tax returns, so the returns are received within a month of filing them unlike traditional process, which takes almost 6months.

About the Author:

taxsum-1003255Mr. Sanjay Kapadiaa is the CEO at TaxSum.com. a comprehensive online tax-filing portal in India developed by SNK ETax Solutions Ltd. MR. Kapadiaa is a science graduate in Statistics from University of Mumbai and is practicing as a Chartered Accountant since 1987 at Surat and a visiting external professor to the MBA & DBIM students of various universities.

Mr. Kapadia also contributed write-ups, articles in various magazines of BCA, Chamber of Tax Consultants, Newspapers etc. He has presented technical papers and chaired Technical Sessions at various conferences and seminars of ICAI and Tax Bar.
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