E-FILING OF INCOME TAX RETURN

SUBMITTED BY: Nisha Ghodake

Roll No: 17019.
(functional project)
 A STUDY OF E-FILING OF INCOME TAX RETURNS

INTRODUCTION:
E-filing is a system for submitting tax documents to the income tax
department through the internet or direct connection, usually without the need to submit any
paper documents. Various tax return preparation soft wares with e-filing capabilities are available
as standalone commercial use. E-file is the term for electronic filing, or sending your ITR from
tax software via the Internet to the tax authority.

E-filing of Income tax return online refers to the process of filing Income Tax electronically.
Now no longer have to stand in long queues and no waiting for deposits. Customized return
forms have been devised by the Income Tax Authority which is available on the site of the
department. These forms have been devised with such details that tax payers need not file any
supporting document along with.

INCOME TAX:

In the modern times, income tax is an annual tax on income. The Indian
Income Tax Act (Section 4) provides that in respect of the total income of the previous year of
every person, income tax shall be charged for the corresponding assessment year at the rates laid
down by the Finance Act for that assessment year. Section 14 of the Income Tax Act further
provides that for the purpose of charge of income tax and computation of total income all income
shall be classified under the following heads of income: salaries, income from house property,
profits and gains of business or profession, capital gains, income from other sources.

The total income from all the above heads of income is calculated in accordance with the
provisions of the Act as they stand on the first day of April of any assessment year. The Income
Tax Department is responsible for all activities related to the taxation process.

The Income Tax Department is governed by the Central Board for Direct Taxes (CBDT) and is
part of the Department of Revenue under the Ministry of Finance, Government of India.
SALIENT FEATURES:

I. Improved Accuracy.
II. Reduced Processing Costs and less document work.
III. Saves Time.
IV. Improved Customer Service or user friendly.

NEED OF STUDY:

There may be changes in the slab rate of tax returns every year or when there
is change in government policies. The user should be known about the current rates and
taxes. The tax payer should know the detail knowledge of filing income tax returns and also
about the amendments made on the rules and slab rate of taxes. The tax payer should know
how to file income tax return online through internet. The tax payer should know the
documents required and the things required in filing income tax such as digital signatures by
chartered accountant which is mandatory.

OBJECTIVES:

I. To suggest the user the process of e-filing of tax return of income tax.
II. To get detailed knowledge about e-filing.

Methods of Filing Returns

 To start with, let us understand the various methods through which returns can be filed:

 Manual Filing – This is the traditional method of filing returns in which taxpayers file
returns manually by visiting the income tax office.

 eFiling Intermediaries – For taxpayers whose schedule is too tightly packed to file
returns; an agent, a chartered accountant or a firm could take the responsibility of
formulating and submitting the returns on his/her behalf.

Process on E- filling IT return

1. Accumulate your payslips to ascertain your taxable income
To start filing your income tax returns, you will have to compute your net salary
from each payslip you got from your employer/s over the course of the financial
year. In case you have switched employers over the course of the financial
year, you will have to ensure that all the payslips are put together for the
computation of your taxable income.

2. Find the tax deducted through Form 26AS

The tax deducted at source by your employer over the course of the financial
year will have to be calculated, and the amount must match the one mentioned
on your Form 26AS. In case there is any discrepancy in the amount that was
actually deducted and the amount that was meant to be deducted, your
employer must be contacted immediately and the error must be rectified as
soon as possible.

3. Claiming House Rent Allowance

The salary of most employees contains a component for House Rent
Allowance. In order to claim this deduction, your rent receipts must be
submitted to your HR/payroll department well before the due date. In case you
forgot to submit your receipts to your employers, they can be submitted at the
time of filing your returns.

4. Claiming deductions
There are several different investments that can offer tax benefits. All the
documents relating to your investments must be kept handy so that you can
determine which ones are eligible for deductions under Section 80C of the
Income Tax Act. These investments could include PPF, EPF, life insurance, etc.
Deductions can also be claimed under Section 80D of the Income Tax Act, such
as premium payments towards medical insurance, and under Section 80E of
the Income Tax Act, such as interest on education loan. When making claims
for deductions on Provident Fund, it is important to only claim the amount that
you have contributed, and not the amount contributed by your employer.
5. Income from other sources
In case you earn income from multiple sources and not just through salary, you
will have to include the same under the taxable income. The kinds of income
that qualify under this head include income from rent on a property you own,
interest accrued from fixed deposits, etc.

6. Make additional tax payment if required

In case you have paid lesser tax over the course of the financial year than you
actually should, it is important to pay any dues you may have.

7. File your returns

If you have confirmation that the overall tax you have paid over the course of
the financial year is actually the right amount, you may proceed to pay your
taxes online.

Benefits of E-Filing IT Returns

Filing of income tax return is an obligation to be met by every taxpayer whose gross total
income from salary, business or any other gains exceeds the specified exemption limit. The
Income Tax Department has initiated the mechanism of e-filing for the purpose of creating a tax
system that makes the taxpayer’s life easy. In this article, we look at the various benefits of e-
filing income tax returns.

The Benefits
Getting back to the context of this article, let us examine how e-filing scores over the traditional
method of manual filing. Here’s an overview:

Convenience
All, or at least the majority of modern-day systems offer convenience to its users, and so is the
case with income-tax. Manual filing involves visiting a tax office crammed with people, making
the entire process tiresome and time-consuming for the taxpayer. On the other hand, e-filing of
returns reduces the strain by facilitating the taxpayers to file returns from the comfort of their
homes.

Status Tracking
It is not that taxpayers wouldn’t be made aware of their ITR status in the past. However, it used
to be a game of patience as the concerned person was intimated of it only through postal means.
This accorded the user with neither power nor convenience, as the taxpayer would have to
depend on postal services, which would restrict the user to track the status on his/her discretion.
The method of filing returns online benefits the taxpayer with the option of tracking status
according to his/her wish. It facilitates the user to check whether the particular return has been
received by the Income Tax Department, its current stage of progress or the status of a income
tax refund.

Access to Documents
E-filing of returns prompts the user to upload the necessary documents, thus creating a database
which could be accessed whenever the need arises. Manual filing of returns had no such
provision.

Refund Processing
Taxpayers can claim their refunds by filing returns. The digital medium has been brought into the
fray to make way for quicker processing over the archaic ones in the country, which had
previously inflicted a severe burden on the common man, for whatever service it might have
been. E-filing of returns under income-tax provides the taxpayer with an edge, as he/she is likely
to receive funds faster than he/she ever could have under manual filing.

Auto-population of Records
Manual filing of returns involves the manual filling of forms, which is an activity dreaded by
many. E-filing takes away such complexities as the data is auto-populated during the initial filing
of returns, making it easier for the applicant on the filing of prospective returns.

Errors at Bay
We, humans, are prone to errors, especially when it comes to computations. Filing of return
involves a lot of computations, and manual filing could lead to the furnishing of incorrect details
due to erroneous calculations. The e-filing mechanism curbs this deficit by way of its tax
calculation mechanism.

Efficiency in Cost
In the absence of a calculating tool, the taxpayer might be required to hire a professional to make
the essential computations; which effectively means the taxpayer would be obligated to pay
more. The provision of e-filing is set to spare the taxpayer from such financial burdens.

E-Verification
Previously, income-tax returns were dispatched to CPC Bengaluru, which handled the aspects of
verification. Income tax returns can now be verified online through the e-verification facility.