How to file tax returns electronically

Come July, what is on top of our minds is tax return filing.

Most of us might have experienced hardships in manual preparation and verification of returns, visiting the tax office, identifying the jurisdiction and spending time in long queues when filing the returns in paper form. On the contrary, e-filing is really a boon, as the benefits range from avoiding long queues to file returns to quick processing of the tax returns to speedy refunds. But the catch is that you need to focus on a few things while filing the tax return electronically. Otherwise, you will end up wasting time with added woe to set things right later on. Here is a guide to e-filing returns through the Income-Tax Department’s Web site.

What you should do

Ensure that appropriate ITR Form is used, which is available for download in the Income-tax e-Filing website – https://incometaxindiaefiling.gov.in. For example, ITR 1 is to be used in case an individual has income from salary, house property and other sources whereas ITR 2 is applicable for those having income from all other sources except income from business or profession.

Also, fill in your correct contact details (address, email and telephone number) in the income-tax return, to ensure appropriate communication from the Tax Department. Make sure that the bank account number and MICR code (the 9 digit number found at the bottom of the cheque leaves) is entered correctly, in order to facilitate refund credits.

Verify the tax credits as reflected in the Form 26AS (available for download in the same website). Form 26AS is a consolidated tax statement which includes details of tax deducted at source, advance tax, self assessment tax etc deposited by the taxpayer. You must identify any mismatch in the tax credits against the Form 16 / Form 16A (TDS certificates) issued, to take up the matter with the deductor (employer / banker) on time.

Steps to Filing return

As a prerequisite, you should get registered at www.incometaxindiaefiling.gov.in using PAN and other personal and contact details. On receipt of activation link and by successfully activating it, you are ready for e-filing of the tax return.

In this context, it is also beneficial to understand ‘XML files’ and ‘Digital signature’ . XML file is a file format which is generated for uploading a tax return, which can be understood both by the taxpayer and the computer. Whereas, digital signature is a method by which authentication is done electronically instead of physical signature.

The following steps should be taken for e-filing of the tax return. First, select the appropriate ITR Form and download the same. Fill the ITR Form offline and save the XML file generated by the Form.

Then, register your PAN in the income-tax website by getting a username (the PAN itself ) and a password (of your choice). Log in and click the relevant form on the left panel and select "Submit Return". After this, upload the XML file and print the acknowledgement/ ITR-V Form. If you wish to use a digital signature to sign the return, then the process is over. If not, you need to sign and file the acknowledgement with the Central Processing Centre (CPC) of the Income-tax Department within 120 days of uploading the return. Once the CPC receives the physical copy of the signed ITR-V form, an acknowledgement will be sent by email.

The income tax department has upgraded its e-filing website with additional features. With a user-friendly interface and enhanced features, the website allows taxpayers to submit tax returns, request for rectification of returns, view old tax returns and their acknowledgements as well as demand and check the status of tax refunds. Though the process of e-filing may appear to be little complicated, by paying a little attention to above, one can reap the benefits of e-filing!

What you should not do

Do not miss to file your returns on time. Delay in filing the tax return has certain unfavourable consequences as you would lose your entitlement to carry forward losses to subsequent years (except loss from house property). Also, you lose the benefit of being able to revise the return in case of an error or omission discovered later. Lastly, it could also be a costly affair as there is an interest charge at the rate of 1 per cent of outstanding taxes, per month of delay in filing the returns.

Do not forget to send the signed ITR V, after uploading your tax return on the website of the Income-tax department (without digital signature), within 120 days to CPC, else the tax return becomes invalid as and is as good as not filed.

(The writer is a senior tax professional, EY.)