Revenue authorities in many countries have provided taxpayers an online interface.

E-filing of tax return has undoubtedly eased the process by bringing in transparency and visibility. Individuals no longer need to stand in long queues to file their return; in fact, it is now mandatory to file online if the taxable income exceeds Rs 5 lakh. The return forms, with relevant instructions, are available on the official Web site.

To make e-filing more user-friendly, the department plans to introduce electronic PIN-based verification from this year. This will help ease the post-filing requirement of sending a hard copy of the acknowledgment ITR-V to the Centralised Processing Centre in Bangalore. The new portal will also provide pre-filled information, such as tax credits, in the form. This will help speed up the refund process.

The department has also launched a dedicated portal called TRACES (TDS Reconciliation, Analysis and Correction Enabling System), which provides an interface to all stakeholders in TDS (tax deducted at source) administration. Taxpayers can view the challan status, download Consol File, Justification Report and Form 16/ 16A as well as view the annual tax credit statements (Form 26AS).

Employers should mandatorily download Part A of Form 16 from TRACES — with this they can reconcile the tax amounts of Part B in Form 16, and resolve differences by revising the employer returns before issuing Form 16.

The online system has facilitated resolution of mismatch between tax deposited and corresponding tax credited for each taxpayer, bringing about real-time reconciliation of TDS filings and refund claims. The system also allows instant detection of erroneous claims and faster payment of verified claims.

There are challenges as well. Of late, a plethora of system-generated notices have been issued to individual taxpayers and corporates.

Notices issued to employers mainly relate to short deduction of tax for salary paid, or delay in deduction/ deposition of tax; the department consequently treats them as an assessee in default, which may lead to prosecution. Corporates have also received notices for similar reasons, and others such as quoting incorrect PAN, short deduction of tax where the certificate for lower withholding was obtained but requisite disclosures not made in the quarterly returns, and unprocessed tax credits. Individual taxpayers have received notices for relief claimed under Double Taxation Avoidance Agreement.

In some instances, taxpayers have received automated notices for no fault, such as demand notices generated due to rounding off in the system. Notices have also been issued to taxpayers who have carried out high-value financial transactions in the previous year, but have not filed their income tax return. A nodal cell with an online monitoring system has been set up to ensure follow-up action and track filing by the targeted segment.

Taxpayers should take care to provide correct and adequate information in the withholding tax return. E-filing provides real-time information to the tax department to track non-compliance and tax mismatch, which can attract penal action.

Divya Baweja is Senior Director, Deloitte Touche Tohmatsu India Pvt Ltd; Divya Agarwal is Manager, and Sana Zehra is Deputy Manager, Deloitte Haskins & Sells

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