E-Filing of Income Tax Return

E-Filing of Income Tax Return

This article explains about the electronic filing of income tax return, also known as e-filing of ITR. It explains in Question and Answer form and pictures, What is e-filing? Who is e-Return Intermediary? Advantages of e-Filing? How to efile on income tax department website i,e incometaxindiaefiling.gov.in? How is it different from filing through tax filing sites like taxshax, taxspanner etc? What is digital signature? What is XML? What is ITR-V? Statistics of efiling.

What is a income tax return ?

It is a prescribed form through which the particulars of income earned by a person through various sources(like salary, business, professional fees, interest, capital gains, etc.) in a financial year and taxes paid on such income is communicated to the Income tax department after the end of the Financial year, called as income tax return or ITR. It is like your report card in school but instead of  marks you have income and taxes.  It is the constitutional obligation of every person earning income to compute his income and pay taxes correctly. Different forms are prescribed for filing of returns for different Status and Nature of income . Forms for Financial Year 2012-13 or Assessment Year are now available and can be downloaded from the incometaxindia.gov.in webpage download-forms.

Some terms associated with filing of income tax return.

Financial Year (FY) (or fiscal year) is a period used for calculating annual or yearly financial statements in businesses and other organizations such as government.In India, the financial year runs from 1 April to 31 March Example 1 April 2013 to 31 March 2014 for the current financial year (2013–14)

Previous year(PY) means the financial year in which the individual has actually earned the income( Currently 2012-13)

Assessment year (AY) is the year when that income is assessed (currently 2013-2014). Income is assessed in the next financial year.

Due Date : The lastdates for filing income tax return for an Assessment Year is called due date.  For individuals it  is usually 31st July of the Assessment Year.

·         Individuals 31st July

·         Companies & their Directors 3oth September ,

·         Other business entities, other than companies, if their accounts are auditable & their working partners 3oth September

For FY 2012-13 (AY 2013-14) last date for filing return For individuals is 31st July 2013 You need not wait till end of July Once you get Form 16 (usually around min May) you can file the return.

What is efiling of income tax return?

The process of electronically filing Income tax returns through the internet is known as e-filing. One can file directly(incometax website) or through an e-Return Intermediary such as Taxsmile,Taxspanner. While the I-T department lets you file your returns online for free, most other portals charge a fee.

Who is e-Return Intermediary?

An intermediary (or go-between) is a third party that offers intermediation services between two parties which in case of Income tax return is income tax department and tax-payer. Income tax department (ITD)  allows authorised intermediaries to electronically file returns on behalf of taxpayers. It is allowed under scheme titled Electronic Furnishing of Return of Income Scheme, 2007 to improve interface.  TIN NSDL website has more information about e-Return Intermediary 

What is physical filing of income tax return?

In case of physical filing the return, an individual needs to fill the printed form or the hard copy and submit it to the nearest Income Tax Office (ITO) and get an acknowledgement.

What are advantages of e-Filing?

·         Anywhere, Anytime files, 24 x7 x 365 service.

·         Easy, fast,free and secure

·         Faster processing and quicker refunds.

·         Value added services like viewing Form 26AS,  tracking of refunds,email, SMS alerts regarding status of processing and refunds.

·         And now it is also compulsory for most.

Is E-filing compulsory?

E-Filing Returns is  compulsory for:

·         Individuals earning over Rs 5 lakh a year. They are required to file their tax returns in the electronic format from AY 2013-14 (FY 2012-13) and subsequent assessment years.

·         Individual/HUF, having total Income of Rupees 10 lakhs. It was made mandatory from AY 2012-2013((FY 2011-12) and subsequent assessment years.

·         Individual/HUF /Firm auditable under section 44B of the IT Act, 1961. It was made mandatory for AY 2012-2013 and subsequent assessment years.

·         All Companies

How to efile on incometaxindiaefiling.gov.in?

To file on incometax department efiling website incometaxindiaefiling.gov.in steps are ”

1.     Fill the form for which there are two options

·         File return offline : means you can download the form, fill it without being connected to internet and submit the form online.

·         File return online (which currently shows for filing only ITR 1) : means that you need to be connected to internet for filling the form as well as submitting it.

2.     Choose whether you want to use digital signature while filing. A digital signature authenticates electronic documents in a similar manner a handwritten signature authenticates printed documents. This signature cannot be forged.

3.     If you do not use digital signature the Income Tax receipt, called as ITR-V, needs to be printed and sent to Central Processing Unit (CPC) Banaglore within 120 days of filing return.

These steps are explained in video by Income Tax Department on Youtube. Link is here  

What are the steps to file returns offline at incometaxindiaefiling.gov.in?

Steps to file returns offline are :

1.     Download the applicable ITR form which is zip file which has Microsoft excel file also called as Return Preparation Software

2.     Fill it offline

3.     Generate a XML file and save it to your computer.

4.     Logon to incometaxindiaefiling.gov.in (If you don’t have the Login you need to register )

5.     Go to e-File->Income Tax Return and Upload your XML file (saved in step 3)

6.     Choose whether you want to use Digital Signature or not

7.     On successful upload acknowledgement details would be displayed.

8.     If you did not use digital signature the Income Tax receipt, ITR-V, needs to be printed out and sent to Central Processing Unit (CPC) Banaglore within 120 days of filing return.

Form to fill in offline mode is an excel file shown in picture below :

Efile income tax offline : Excel format

What are the steps to file returns online at incometaxindiaefiling.gov.in?

Steps to file returns online are :

·         Logon to incometaxindiaefiling.gov.in (If you don’t have the Login you need to register )

·         Choose the Form and Assessment Year. Note: Currently only ITR 1 form can be filled and Assesment Year shows as only AY 2012-13.

·         Choose whether you want to use Digital Signature or not

·         Fill the form

·         Submit the form.

·         On successful submission acknowledgement is generated.

·         If you did not use digital signature the Income Tax receipt, ITR-V, needs to be printed out and sent to Central Processing Unit (CPC) Banaglore within 120 days of filing return.

Form to fill in online mode is shown in picture below :

E File income tax return online at incometaxefile.gov.in

How is to e-file using e-Return Intermediary?

E-return intermediary i.e tax filing sites like Tax-Shax, TaxSmile, TaxSpanner etc provide online software which asks unambiguous, clear-cut questions about the nature and amount of annual income the ‘what’ and the ‘how much’. This way, it systematically draws relevant income tax filing information without requiring to get into the nitty-gritty areas of income tax law interpretation and computations. But that comes at a price as these tax filing utilities charge for using their services. Charges usually start from Rs 250 and depends on what kind of help one needs ex: does the form filled need to be reviewed by the tax expert, need help in sending ITRV etc. A sample of screen from E-return intermediary(Taxshax) website shown in picture below.

E-file income tax return using e-return intermediary

Note: We do not use and are not recommending TaxShax. It’s just a representative picture that we are showing to show filing of returns through E-return intermediary.

It becomes convenient for a person

·         Who is not comfortable using Excel. Remember that for offline filling of Income tax return downloaded is in Miscrosoft excel format. (Unless

·         Is not aware of income tax laws and computation and needs help or hand-holding

What is a Digital Signature?

A digital signature authenticates electronic documents in a similar manner a handwritten signature authenticates printed documents. This signature cannot be forged.

·         India is one of the select band of nations that has the Digital Signature Legislation in place. This Act grants digital signatures that have been issued by a licensed Certifying Authority in India the same status as a physical signature.

·         The Digital Signature certificates are typically issued with one year validity and two year validity.

·         You can get digital signature from Certification Agencies. Certification Agencies are appointed by the office of the Controller of Certification Agencies (CCA) under the provisions of IT Act 2000. There are a total of seven Certification Agencies authorised by the CCA to issue the Digital Signature Certificates.

1.     Tata Consultancy Services CA

2.     National Informatics Centre

3.     Institute for Development & Research in Banking Technology (IDRBT)

4.     MTNL 

5.     Code Solutions Ltd.

6.     Safescrypt

7.     e-Mudhra

What is XML?

XML stands for EXtensible Markup Language  it does not DO anything and is used to structure, store, and transport information.

·         XML is a markup language much like HTML i.e has tags ex of tag is .

·         XML tags are not predefined. You must define your own tags

·         XML was designed to carry data, not to display data

The following example of XML file which is to captures sending of note to Tove, from Jani. Tags , , etc are defined by software who will process the information.XML about note  has sender and receiver information, it also has a heading and a message body. It depends on how the information stored in XML is used.

Example of XML file

What is ITR-V?

ITR-V stands for ‘Income Tax Return – Verification’ form. E-filing without digital signature is not complete till signed ITR-V is sent.

·         This form is generated when you e-file without using a digital signature.

·         It is sent to the email id registered if filed on incometaxefile.gov.in.

·         This form is used by Income Tax Department  to verify the authenticity of income tax return when filed online without using a digital signature.

·         It is password protected. To open the PDF copy of ITR-V, please enter your PAN in lower case and date of birth in case of the individual tax payers / date of incorporation for non-individual tax payers in DDMMYYYY format without any space between the PAN and date fields.

·         You have to take print-out of ITR-V form generated, sign the copy and send sent by Ordinary Post or by Speed Post ONLY within 120 days from the date of e-filing

·         It is sent to the to Central Processing Unit (CPC) of Income Tax Department in Bangalore which handles e-filing.

Its address is :

Income Tax Department – CPC,

Post Bag No – 1,

Electronic City Post Office,

Bangalore – 560100,

Karnataka – India.

Sample ITR-V form is shown in picture below :

ITR-V Form

What is status of e-filing of Income Tax Return in India?

Efiling started in FY 2003-04,when income tax department made it compulsory for all corporate deductors to file Income tax returns for deduction of tax at source (TDS) only in electronic form.From FY 2004-05, in addition to corporate deductors, filing of TDS returns in electronic form is mandatory for government deductors also. government is making more people to file their returns  electronically. The income tax e-filing website shows efiling Statistics. A picture from history of efiling is shown below.

E-filing statistics