The Hindu Business Line : The good and bad news about e-filing of I-T returns

HAVE you missed the due date for filing income tax returns and are reluctant to pay the penal interest for delayed filing? Thanks to electronic-filing (e-filing), you have another chance and don't have to the pay the penalty either.

The good news is that the Central Board of Direct Taxes has extended the date for e-filing of returns to August 31, for those who had a July 31 deadline.

The not-so-good news is that e-filing is nothing like e-ticketing, where you can just log on and send your documents online. Even if you opt for e-filing, there is no escaping the drudgery of filling those return forms manually and enclosing the necessary attachments.

What is e-filing of returns all about?

For most of us, the filing of returns is a taxing chore (literally and figuratively!) of number-crunching and filling out forms, ensuring that all attachments are in place and waiting in long chaotic queues at the income-tax office. E-filing — for now — will remove the last part of the procedure for good.

That is, it allows you to file your annual return of income via the electronic mode instead of doing so physically at the income-tax office.

E-filing cannot be done directly, it requires an e-intermediary who must be authorised by the tax-payer as his or her agent for the purpose.

On receiving the filled-in form along with the attachments, the intermediary will transmit the data online, to the server of the Income-Tax (I-T) Department. On validation of the same, the Department generates an online acknowledgement.

The agent will subsequently file your signed physical return of income along with the online acknowledgement to the I-T Department and give you a copy of the electronic receipt and physical return. Of course, all this comes for a fee.

Who is an e-intermediary?

A firm of chartered accountants or advocates or a practicing chartered accountant, or advocate, a registered company or bank providing financial services can act as an e-intermediary, provided they are registered with the National Securities Depository Limited (NSDL) as an authorised agent. These agents possess the requisite infrastructure to load and transmit the data and have authorised digital signatures.

Your employer can also act as your agent. If you do not know an auditor or a company offering this service visit http://www.tin-nsdl.com/regereturn-intermediary.asp or contact the NSDL office in your city.

The service is also undertaken by other branches of the intermediaries given in the list.

Why go for e-filing?

E-filing basically eliminates your interface with the I-T Department. You can avoid the confusion in locating your counter and the long queues.

E-filing proposes to speed up the processing of returns and enable faster issue of refunds.

The agents may also offer to compute and prepare your return. For those not comfortable with disclosing their sources of income (apart from the salary) to their employer, an outside agent is an option.

E-filing is a second chance for those who missed the July 31 deadline for the assessment year 2005-06 (FY 2004-05). The penalty would otherwise be one per cent on the tax paid for every month of delay.

Am I eligible to file electronically?

If you are a person (other an association of persons or body of individuals) who has been allotted a permanent account number (PAN) you can opt for e-filing of returns.

Since the PAN acts as the link for the I-T Department, there is no way you can file electronically without it. If you still do not have a PAN, apply for it.

Your agent may be able to advise you on the procedure and, if authorised, may even accept an application for PAN allotment.

How is e-filing done?

If you are familiar with calculating your tax, then all you have to do is fill the requisite form, attach Form 16, challan for tax paid, if any, and any other supporting documents as proof of other income or transactions.

Otherwise, furnish all the details to your agent, who will then do the rest for you. You need only sign.

The I-T Department does not prescribe any fixed charges for the service offered by an agent. They will depend on the nature of the service offered. The services provided by your auditor may be inclusive of the usual tax computation service.

Integrated Enterprises, for example, offers to file your returns for Rs 50 plus service tax.

It charges more, if it is required to compute your tax and fill the form for you. The charges vary depending on the category such as salaried class or business class.

The data will then be loaded online by the intermediary and transmitted to the server of the I-T Department, following which you will receive an online acknowledgement. The date of filing electronically is taken as the date of filing your returns.

Your intermediary will have to file the physical form of returns with the income-tax office within 15 days of filing it electronically.

Although the electronic acknowledgement acts as proof of filing, it is better to get the physical copy of your return with the sealed acknowledgment of the I-T Department. This will ensure that your filing process is complete.

Also, some transactions with banks may require you to submit proof of filing returns and may not be comfortable with an electronic receipt.

Not all electronic?

As for the tax payer, the system is far from being completely electronic.

E-filing, in the true sense of the word, will require that all your supporting documents are digitised and certified online and a secure mode created in the Internet for you to file it electronically. Until this happens, it would remain more or less a physical mode.

It, however, reduces the time spent. Your auditor will also have a smoother time filing the bulk returns through the Internet.

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