Monday, August 1, 2011

Easy ways to file your tax returns

Just two weeks remain for filing tax returns. Tax-payers are, therefore, busy collecting their Form 16 and meeting tax consultants to set the process of filing the returns in motion. Traditionally, tax- payers file their returns through consultants, given the technicalities and hassles associated with the process. But, over the past few years, e-tax filing has become popular, as it makes the process simple. Both offline and online tax-filing have their own advantages and disadvantages. Here is a look at how each works and what suits you the best.

Filing tax returns offline

If you are filing your return in the Sahaj form, ensure the form adheres to the requirements of the income-tax department pertaining to the font, font color, paper size, paper quality, bar code, etc. Else, the form can be rejected. And even if the form is erroneously accepted, there could be delays in processing the return. Double check if you have entered your correct PAN (permanent account number) and TAN (tax deduction and collection account number) of the employer/tax deductor with reference to the TDS certificates in Form 16/Form 16A.

Ensure that extra sheets are enclosed wherever required. "For example, the standard ITR-2 form captures details of only up to two house properties. If you own four houses, you need to enclose additional sheets to provide details of the two other houses," says Vaibhav Sankla, executive director, Adroit Tax Services. However, you should not enclose any other documents with the tax return form. "Documents, such as Form 16, Form 16A, proofs for tax benefits claimed, capital gains workings, etc, should be kept with you and not enclosed with the tax return form. Ensure that the filing date, acknowledgement number and jurisdiction are clearly stamped on the acknowledgement. If they are not clear, you should request the receiving officer to correctly write them on the acknowledgement with his signature," says Sankla.
In case you are claiming a refund, then give the correct bank account number and make sure the MICR code is mentioned correctly. Accuracy of these details will ensure a faster and hassle-free refund.

"Disclose exempt incomes such as dividends from mutual funds and long-term capital gains on listed securities. Even though the tax laws do not require you to pay tax for such income, some return forms have schedules to capture these details. Lastly, file your return with the correct IT jurisdiction. This ensures faster processing and timely refunds," says Vineet Agarwal, director - tax and regulatory services, KPMG.

Don't wait till the last week of July to e-file your return. Send the signed ITR-V form to the centralised processing centre, Bangalore, as soon as possible and resend it if you do not receive a confirmation for the one sent earlier. Lastly, don't forget the password to your account with the e-filing portal; note it down in your diary. If you are using the tax department's template, make sure you save the incomplete file on your computer's disk. If you're using a portal such as or, make sure you have saved your changes before logging out.

"However, beware of emails that claim to offer links to the income-tax office website. These should be carefully evaluated as they may be intended to steal sensitive personal information like credit card, bank details, etc," says Agarwal.

Issues encountered

Online: The biggest issue many tax-payers encounter is with the password for the account created on the I-T department's portal. Many forget it. The other issue is that the I-T department's e-filing website becomes almost inaccessible (due to server overload) during the last few days of July, forcing many to file their returns offline.

Offline: Long queues at the tax office are common as the July 31 deadline nears. Late processing of tax returns delays refunds.

Documents required
Typically, you need to have your Form 16 issued by your employer, Form 16A issued by banks, housing loan certificate, etc, while preparing your tax return. Some tax-payers may even need to look at their passport to see the arrival/departure days to determine their residential status in India.

Offline vs Online tax filing
E-filing is hassle free when compared with offline filing. "This year, there have been some developments that are pushing tax-payers to opt for e-filing. Firstly, the Sahaj form has too many specifications. The logic behind introducing such specifications is to facilitate easier processing by the I-T department given the increase in the volume of tax-payers in the country. Just to cite one example, the form has some colour specifications, which means the tax-payer has to look for a colour printer to take a printout of the form before submitting it. Tax-payers may find e-filing more convenient," says Ravi Jagannathan, MD & CEO of eMudhra Consumer Service.

You can e-file the return from the comfort of your home/office. The return can be e-filed at any time, on any day and from any location. Offline filing is possible only on weekdays during working hours of the I-T department. Moreover, online returns are processed faster than offline returns and the refund is also quicker. The only hassle with e-filing is that you have to send the signed ITR-V form to CPC, Bangalore. At times, one has to send the signed ITR-V form multiple times.

Tracking refund
The 'Refund Banker Scheme', which commenced from January 24, 2007, is now operational for individuals assessed all over India. Under the scheme, the refund amount will be either transferred electronically to the bank account of the taxpayer or will be sent by way of a cheque.

You can track your refund status by logging on to the NSDL-TIN website and clicking on the 'Status of Tax Refunds' link then and entering your PAN and the assessment year.