Should You File Tax Returns Online

As the tax return filing deadline draws nearer, individuals start looking at options to complete the process quickly as there is no time to waste. They have two options � to file their returns in the traditional form using the physical process or to switch to the online route. However, the choice should be made as per a situation.

Harish has been thinking of using the online route to file his returns this year. He is a private bank employee and has other income like fixed deposit interest and even a housing loan whereby interest and capital repayment can be claimed as a deduction. Further, he has some capital gains for shares and mutual fund units that need to be accounted for. But he is not sure if the online route takes care of everything

Analysis

There is a difference in the method used to file returns, offline and online. The online or e-tax filing is very much in vogue these days. But that does not mean Harish should choose online tax filing by default. Now, let us weigh both these options.

Filing returns offline: Going traditional

This is the traditional way of filing returns. In this method, Harish will need to enter his income details in to a physical return form. The details would include his address, permanent account number (PAN), bank account details and so on. After he signs the actual income tax return, the form along with the acknowledgement copy will be deposited with the tax authorities in the ward where Harish is being assessed. The tax authorities will stamp the acknowledgement and give this back to Harish as a proof of his filing tax. It needs some legwork as the process requires Harish to visit the income tax office. However, there is a way out. Harish can ask someone else to do it for him, instead of going himself.

E-tax filing: The flavour of the season
Now, a lot of the tax filing process including the payment of the tax has shifted online. But how e-tax filing takes place exactly? In this process, Harish needs to use a software made available by the tax department to enter his income details. The software has to be downloaded and the income details filled into this. The details mentioned in the return form and the offline form will be the same. Harish will be needed to create a login and a password and then after having logged into the account, he can upload tax return electronically. After submission, he will get a computer-generated acknowledgement. If the return is digitally signed then the process is complete and requires no further action.

Pros and cons

Advantages of offline tax filing

• After filing returns offline, Harish will get a definite proof in his hands.
• If he uses the services of a chartered accountant the physical return might turn out to be slightly expensive for him but this will be accompanied by availability of personal advice both at the pre- and post-return filing stage.

Disadvantages of offline tax filing
• Harish needs a lot of time and effort including a visit to the Income tax office to file returns.
• He will need to be aware of all the tax laws and do all the calculations himself.
• He might find some difficulty due to the complexity involved in the process and have to use the services of a Chartered Accountant which will entail a cost ranging between Rs 500-Rs 1,500.
• For those involved in a business or profession the services of a chartered accountant will cost more because of the additional work involved.

Advantages of
• Harish will spend lesser amount of time and able to complete the process quickly and easily.
• Harish's job will be made easy as there are now several websites in the country including Rupeetalk which offers the online return filing facility for customers for a price. This price ranges from 199-400 Rs and is lower than the fees charged by many CAs for offline filing.
• If he has a form 16 than these tax filing web sites can easily fill up the income tax form for him by following a simple question and answer method thus simplifying the process.
• If he goes for direct filing through the incometax site he will even be able to do so for free.

Disadvantages of
• Connectivity and other problems with the Internet connection can slow down the entire process.
• In case Harish does not have a digital signature, the verification of the acknowledgement received electronically has to be done offline. The verified part has to be sent by ordinary post to Bangalore within 30 days. No other form of mailing across including speed post, registered post or courier will be accepted. Further, this will be accepted only at a specified address in Bangalore. If this is not received in 30 days then it will be considered that the return was never filed by Harish. Also, in case of loss through ordinary post the tracing will be very difficult.
• If Harish wants to use websites he has to check whether they provide the facility of digital signature and at what cost. Digital signature certificates can also be obtained from seven certification agencies authorised by the CCA and are valid for just one or two years.
• There is usually not much help available for post-return filing issues.
• In case of a self employed, the person will not have a Form 16 and will not know the income details and would again need to know tax laws so as to be able to arrive at their income from business and profession and in such a case these websites will not be able to help.

What should Harish do?
On the whole, Harish needs to get his priority right for the purpose of filing the income tax return and his comfortability with various factors. If his objective is to save time then the online process might be helpful. For those who prefer personal advice and help the offline process will be more comfortable similarly, if he wants to save from the tension and pressure of return filing then he might prefer to continue with the offline method.