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What Is E-Filing and E-Filing Systems?

Different versions are available to explain e-filing and its usage in different e-governance initiatives. The e-filing system (Fenwick and Brownstone, 2002) is making it possible to transmit information electronically using the Internet as stakeholders and government change the use of basic infrastructure to interact with one another. Use of designated e-filing systems mandated by law to submit information electronically is known as electronic filing (e-filing).

5.5.2.1 E-Filing of Tax Returns through the Portal of the Income Tax Department of India

The e-filing portal of the ITD (https://www.incometaxindiaefiling.gov.in/) provides many facilities to taxpayers and has been extended to the electronic filing of other statutory forms and reports as prescribed in the Income Tax Rules. This portal is a single window interface to different categories of users such as individuals, beneficiary trusts, businesses, corporations, intermarries (ERIs), internal departmental users, and external agencies (banks and other government agencies) for information flow and communication through role-based secured access systems. A 24/7, dedicated service desk has been provided for the stakeholders of this system. Provision is there for online feedback and grievances from users and subsequently after analysis, tracking to closure. Important functionalities are being added continuously, and some of the existing functionalities are being upgraded, based on the experiences of the stakeholders and also from the analysis of the online feedback received through the portal. With state-of-the-art systems in place and realizing the potential of the use of the Internet, the department desires that taxpayers who file paper tax returns be encouraged to shift to e-filing. This system has an interface with both a dedicated facility for a jurisdiction-free bulk processing for income tax returns (ITRs), and with core application systems for information flow for assessing officers (AO) and other department officials. There are service-level agreements with all service providers to ensure the timely completion of end-to-end activities. Figure 5.3 shows the end-to-end process of ITRs.

The intimation of the final result of ITR processing is sent through e-mail as well as through Short Message Service (SMS) to the concerned stakeholders. From the financial year 2015-2016, the new functionality/facility has been introduced by the department to give optional alternatives to ITR-V. Instead of ITR-V, "Aadhaar"-based authentication or taxpayer's authentication through a bank (empanelled) database are being used to verify the e-filing of an ITR (e-signature). The trends of adoption of this facility show signs of success. For the users of this facility, the department was able to process their returns and send refunds within a few days of filing, to the bank accounts (ECS) of eligible taxpayers. This was a record, and a delightful development for the taxpayers as well as for the department. Figure 5.3 shows the end-to-end process of e-filing the ITR and information flow through the tightly coupled integration with back-end systems until the tax refund is received by the taxpayer.

To ensure that users derive maximum benefit from this e-government initiative, in the last few years, there has been a further push by the department to focus on awareness and education of taxpayers, steady inclusion of more taxpayers' categories as compulsory e-filing of ITR, involvement of intermediaries and tax return preparers (TRPs) to encourage the e-filing of ITRs, and include/shift more business services of the department to e-services through this portal. For the FY 2015-2016, more than 43 million ITRs were filed as e-returns on the e-filing portal. More than 52 million are registered users of this system (retrieved from: https://incometaxindiaefiling.gov.in/in April 2016). Figure 5.4 shows the summary of growth trends of different activities of e-filing systems of the ITD.

After the success and acceptability of this portal, coupled with the growing expectations of the citizens, it has become a single window of interaction with the department for all external stakeholders, including the taxpayers who are filing their ITRs in paper format, who are also being given many services through this portal. Observing the success of the new e-filing facility of the department, many new categories of taxpayers were added to the compulsory e-filing. This has led to faster processing of most of the filed returns and more satisfied taxpayers. The year-wise development in this direction (Table 5.1) was as follows:

New facilities (after going live) that have been added on the portal in the last couple of years are [1]

FIGURE 5.3

e-Filing of ITR.

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FIGURE 5.4

Year-on-year trend of actives on e-filing portal. (Source: Reports of ITD on portal.)

TABLE 5.1

Assessment Year (AY)

Category Added for Mandatory File the Income Tax Return (ITR) Electronically (e-Filing) for the Relevant Assessment Year

2006-2007

For all those companies that require statutory audit u/s 44AB

2007-2008

For all those companies and businesses/firms that require statutory audit u/s 44AB

2010-2011

Digital signature is mandatory for e-filing of ITR for all those companies and businesses/firms that as per Income Tax Rules, require mandatory e-filing of ITR

2011-2012

It was made mandatory to file ITR-5 or ITR-4 electronically using digital signature for all businesses/firms or individual/Hindu undivided family (HUF) covered u/s 44AB

2012-2013

If the total annual income for an individual or a HUF exceeds INR 1 million, e-filing of ITR is mandatory. However, digital signature will not be compulsory for these taxpayers to e-file their ITRs.

2013-2014

If the total annual income for an individual or a HUF exceeds INR 0.5 million, e-filing of ITR is mandatory. However, digital signature will not be compulsory for these taxpayers to e-file their ITR.

Also covered for mandatory e-filing of ITRs are the individual/HUF, being Indian residents, and having assets located outside India.

2014-2015

If a taxpayer is required to furnish a report of audit specified under different sections of the Income Tax Act, shall furnish the said reports and ITR electronically.

2015-2016

e-Filing of ITR is compulsory if refund is claimed by the taxpayer (other than above covered taxpayers).

Source: Notifications issued by the ITD from time to time.

  • [1] Option to capture the response of the taxpayer to his or her outstanding taxdemand (arrears). • Facility to capture any grievances related to processing ITRs and functionality forfeedback mechanism for grievances logged. • Audio Captcha-enabled portal. • Compliance functionality for taxpayers. • e-Filing and net banking integration.
 
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