What is E-Preparation of Income Tax Return?
E-Preparation of IT Return is the process of preparing your Income Tax Return using a software.
The E-Preparation software can be of 2 types:
A. Manual Calculation:
Those that allow you to enter your Income Tax data but do not calculate the Income Tax & Refund etc. The individual user needs to calculate the above himself/herself
B. Auto Calculation:
Those that take the Income Tax related data that you have entered to automatically calculate the Income Tax and Refund using their inbuilt tax calculation engine that is updated for current rules
Auto Calculation Software is more efficient and less prone to calculation errors.
What is E-Filing of Income Tax Return?
E-Filing of IT Returns is the process of electronically submitting your Income Tax Return to the Income Tax Department.
This electronic submission can be done in one of the following ways:
A. Manually :
Where you take the output of the software in XML or non-XML format , convert to XML in case of the latter and upload it to the Income Tax Website.
Providers that are Authorized E-Return Intermediaries of ITD, are integrated with the Income Tax Department and authorized to E-File your Income Tax Return. Such providers allow you to E-File your return with a click of a button.
XML upload is tedious and user may run into issues for incorrect format or validation error.
How do I sign my Income Tax Return when I E-File?
An ITR is an important document and the individual to whom it belongs needs to sign it – Manually or Digitally to affirm that (s)he has reviewed it and is the one who is officially submitting the ITR.
An IT Return can be signed in the following ways when it is being E-filed:
A. Digitally :
Use digital signature, in which case no further action is required. An acknowledgment of filing is provided instantly after submission.
B. Without Digital Signature (paper signature):
You can E-File without digital signature, in which case ITR-V form is to be physically signed & filed with the department’s Bengaluru office .ITR-V is a single page receipt cum verification form that is sent to the assessee via an e-mail from ITD.
Benefits of E-filing ITR
E-filing is easy, fast, and the most reliable and secure method
- Fast Processing: The acknowledgment of ITR submission is fast and the refunds are processed faster by the ITD for E-Filed ITRs.
- More Accurate: E-Filing software with built-in validations and electronic connectivity to ITD are seamless and help minimize errors. Paper based filing with self calculations can be prone to error. Also, when any paper based form is transferred to electronic system , there is always a possibility of human error in data entry.
- No Time place constraint: You can file anytime, anywhere. E-Filing is available 24 hours a day, seven days a week , so taxpayers may always file at their own convenience.
- More Secure than Paper based filing: E-filing is safer than paper based filing. With paper based filing your confidential identity information is lying in files and can be passed from person to person in the CA’s office or in ITD’s office.
- You can easily access and use your data for future returns: Most of the paid E-filing software applications store your data in a secure manner and allow you to access it whenever you are ready to file subsequent returns.
- It is good for the environment: E-Filing is environment friendly. You just need to print no or at most one page instead of multiple copies of multiple pages that is required in case of paper based filing.
How to select an E-filing Software
|Attribute||Low End||High End|
|Tax Calculation||You calculate yourself||Automatically Calculated|
|ITR generation||PDF file for manual submission in local ITD Office Only or XML||Direct transmission* to ITD|
|Data Transmission to ITD||You upload XML||Automatically transmitted*|
|Support to end users||No Support provided or minimal support provided||Support Staff can be accessed via email, chat or phone 24*7|
|Security||Limited||Over 128 Bit SSL to protect your confidential Information|
|Storage of past ITR||Not Provided||Provided so that you may import your previous ITRs data|
* Provided by ITD Authorized E-Return Intermediary Only