With July round the corner, the top priority on every individual’s “to do” list is the filing of a personal tax return and collating the paperwork to complete the process. It is necessary to prepare yourself with the forms and paperwork well in advance to avoid last-minute hurry and anxiety.
Before starting the process of actually putting together the numbers on the return form, the supporting documents and income proof should be collated—for example, tax deducted at source (TDS) certificates issued by the employer and by the payers who have deducted tax; rent; interest income, along with bank account statements to track the interest income; expenses and investments; and brokers’ note for the summary of stock purchase and sales, to name a few.
The recent inclusion of the annual information reporting questions in the return form require a plethora of information such as purchase of mutual funds, payment of credit card bills, purchase of homestead property, to name a few. Therefore, it becomes important to keep track of not only income but also expenditure during the fiscal year.
Taxing times: Assessees at a special income-tax filing facility at Pragati Maidan in New Delhi on 29 July 2007.
The due date for individuals to file tax returns is 31 July, following the end of the fiscal year 2008 (1 April 2007 to 31 March 2008), but for those who are required to get their accounts audited under the Income-tax (I-T) Act, the due date is 31 October. While the return may be filed until two years from the end of the fiscal year (prior to 31 March 2010 for the fiscal 2008), the interest clock starts ticking from the due date of filing of the tax return if there is a deficit in payment of taxes. In addition, if such a return is filed after the end of one year (after 31 March 2009 for the fiscal 2008), apart from interest, a penalty of Rs5,000 may also be charged.
Once you have all the information you need and the tax calculation is ready, you are ready to file the tax return. The options available for reporting income are the traditional hard copy filing, or the new and exciting electronic filing, which allows an Individual to file a return online on the Internet by just the click of a button.
In order to make the e-filing completely paperless, an individual needs to first obtain a digital signature. A digital signature is issued by a Certification Authority (CA) and is signed with the CA’s private key. The signature is issued with a one- or two-year validity and costs between Rs1,499 and Rs1,600 for the one- and two-year period, respectively. After the expiration of the specified period, the signature may be renewed for a cost of Rs749/Rs900 for the one/two-year certificate. There are a total of seven CAs authorized to issue this signature, among which are www.tcs-ca.tcs.co.in or www.mtnltrustline.com, and this process should take about a week’s time.
A person using this digital signature can complete the return filing process by uploading the tax return on the Income Tax Department’s website—http.\\incometaxindiaefiling.gov.in.
To upload, the individual should first get registered on the website from where a software application required to e-file the tax return can be downloaded. The software will generate the I-T form and will also convert the details of the form into an acceptable format called “XML.” This format will have to then be uploaded on to the e-filing server of the Income Tax Department and that completes the return filing process.
For an e-filing without the use of the digital signature, a two-step procedure has to be followed. The first step is to transmit the details of the return form electronically on to the tax department’s website. After uploading the details of the return form, the server will generate a Form ITR V. A signed copy of the ITR V is required to be filed with the tax office within 15 days of the electronic filing of the return. This method seems to be more popular because obtaining a digital signature is in itself a separate process. But, yes, the question does arise: Why e-file if we still need to stand in long queues to physically file the return form?
E-filing is more convenient and involves no personal interface with the tax office staff if the individual has the digital signature. The return can be filed anywhere and anytime.
However, return preparers are facing some teething problems while filing tax returns such as frustratingly slow downloads and a very high uploading time. The portal hangs on minor typewriting errors such as extra spacing between words or use of an incorrect date format.
Taxpayers, who are still comfortable with the old, hard copy filing, now don’t have to stand in long queues. The return can also be filed at the nearest post office. Even for individuals filing without a digital signature, the physical copy of the return may be filed later once the return deadline and rush to file is over. If the tax department can consciously try and sort out the administrative issues associated with the process, standing in long queues in the scorching heat to file a tax return may really become a thing of the past.
The writers of this story are staff of Ernst and Young Pvt. Ltd.