7 Reasons why you should file Income Tax Returns electronically


One out of every three tax returns are now filed electronically in India [1]. That’s 1.64 crore tax returns. The Income Tax Department has scripted one of the largest transitions from paper to electronic form in the country. They introduced e-filing five years ago and now e-filing accounts for 1/3 of all tax returns filed.

    electronic Income Tax Filing


The dramatic adoption rate was pushed by a lot of effort on the part of the I-T department: Customer education, advertising in Newspapers, TV, compulsory regulation, encouraging third party tools and a fairly high quality infrastructure to support the high transaction online volume.

The primary driving factor is convenience. E-filing is much better than the paper based alternative. Cheaper, more efficient and safer.

So here are the Top 7 reasons why you should file your tax return electronically this year:

    1. Compulsory for some people:

    There are cases where it is mandatory to file tax returns electronically. If you earn more than 10 Lakh Rupees a year, you have to e-File. If your books are audited, then you have to e-File. Businesses typically have to e-File.

    2. Faster Refund processing:

    The Income Tax Department has a mandate of issuing refunds faster for e-filed returns. The internal deadline is 59 days for issuing refunds of returns received electronically. This is useful if you have a refund coming.

    3. Convenience:

    Why go to the Income Tax office to submit a tax return when you can submit the tax return at the click of a button? Petrol is very expensive, so anything that helps you avoid a trip is great!

    4. Color printing needed for ITR-1 and ITR-4S:

    The new ITR-1 and ITR-4S forms need to be printed in colored format. Access to good quality color printout may not be always available. It is easy to just submit electronically instead of worrying about the quality of the print-out. The colored format is specified by the I-T department so they can scan your tax return. So in the end your tax return is going to be processed electronically. Might as well help the department!

    5. Accuracy of data:

    The I-T department will scan your tax return or someone will manually feed in the data to their electronic systems. There might be mistakes in this manual process. It is better to submit data electronically. You know they’ll get the same data you actually submitted!

    6. Better for the environment:

    The tax return you print is on paper that is obtained from cutting down trees. Be good to the environment. E-file and save the environment!

    7. Electronic backup of your tax records:

    If you use e-filing with service providers like cleartax, you get backup of your tax records which you can download when you need them later. A lot of times, we need I-T returns for visa applications, bank loan applications, etc. We forget to keep photocopies of the original tax return or sometimes just misplace the papers. With electronic backup of tax records, we can go to the service provider website and download them again.

      Issues with e-filing

      When you e-file, you get an ITR-V which is an acknowledgement. You have to send this ITR-V to the Income Tax Department within 120 days of electronic filing. Also this ITR-V has to be sent by ordinary post (Indian Postal Service).

      This is a bad requirement in my opinion. In our experience a lot of people forget to send in their ITR-V in time. Using Indian Postal Service is also an issue for some people.

      You can avoid sending the ITR-V if you file your tax return with a Digital Signature Certificate. The process with digital signature is completely electronic. You provide your digital signature at the time of electronic filing and this proves your identity. Then, you don’t need to send ITR-V at all.

      Send that ITR-V

      Still, If you don’t want to use a Digital Signature Certificate, just print the ITR-V (one page), sign it, put it in an envelope, stick a stamp and put it in a mailbox. Also note that most courier companies provide service to send your envelope via Indian Postal Service. They might have a small extra charge for handling your envelope. Don’t send a courier as it won’t get delivered.

      [1] Based on the data released by the Income Tax Department and the Direct Tax Code Report. / [Image Credit]

      [About the Author: Archit Gupta, is the founder of ClearTax. ClearTax helps Individuals prepare and electronically file their Income Tax Returns. You can contact him via email: [email protected]]

      Leave A Reply

      Your email address will not be published.

      who's online