E-filing gathering wider acceptance

The income-tax returns (ITR) e-filing project is an eminent e-governance and e-delivery measure taken by the income-tax department (ITD) for improving services. Notified in 2006-2007, it enables e-filing of returns, audit reports and other forms of income-tax by the taxpayers directly and through e-return intermediaries. E-return intermediaries develop sophisticated applications for services such as return preparation, 26AS matching, refund status tracking, rectification in filing, revised filing and response to scrutiny notices. Personalized services, including pre-filling of returns with taxpayer details and 26AS data, have now become common.

Last year, approximately 50% of tax returns were filed electronically according to the annual report 2012-13 released by the ministry of finance. The Income-tax Act has since FY13 made e-filing of returns compulsory for taxpayers having an income of 5 lakh or more. This is in addition to all corporate assessees, who have to compulsorily e-file their returns and all cases covered by audit under section 44AB of the Income-tax Act. With these changes, the penetration of e-filing is expected to be more than 75%. While it took more than two decades for e-filing penetration to reach this level in the US, the Indian ITD has achieved this remarkable feat in a little over five years. Of the e-returns filed, nearly 73% have been filed voluntarily by taxpayers, indicating broader acceptance of e-filing.

Benefits of e-filing

* The average ITR processing time has now been reduced to 47 days, much less than what it tool for manual processing—approximately 14 months.

* Faster processing has led to reduction in interest amount paid on refunds. From 9.8% in pre-e-filing days, it has come down to 4.7%. On a refund amount of about 15,000 crore in a year, it is a saving of 750 crore to the exchequer.

* With e-filing, rectification requests for ITR have decreased from 5.9% to 1.3%.

* In terms of percentage, the count and amount of e-payment tax challans for FY12 were 54.41% and 83.26%, respectively. In FY13, the count and amount of e-payment challans have gone up to 60.68% and 85.62%, respectively.

The tangible benefits which the country and the taxpayers are receiving and will continue to receive every year clearly indicate that e-filing is just going to get bigger every year.

Sudhir Kaushik is a chartered accountant and CFO, TaxSpanner.