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How ITR Filing Process Has Evolved In Last 10 Years

Filing of income tax return (ITR) has been simplified by a series of steps in the past 10 years. The ITR filing process has come a long way from the simplification of income tax forms with the launch of forms Saral-II and Sugam to the launch and evolution of the e-filing system. Today individual assessees except super senior citizens are mandatorily required to file their income tax return online. Meanwhile, the number of returns filed online has increased multi-fold over a period. The count of income tax returns filed online (through the ITR forms 1 to 7) has surged more than seven times to 6.68 crore in financial year 2018-19, from 90.5 lakh in financial year 2011.

Here are key measures taken to simplify the income tax return filing process in 2010s:

E-filing platform

Since the launch of the e-filing project by the I-T department in 2006, online filing of ITR was introduced first to organised firms and then to individual taxpayers in phases. In May 2013, the taxman made it compulsory for individuals and Hindu Undivided Families (HUFs) earning more than Rs 5 lakh a year to file returns through the e-filing process. In other words, manual filing of ITR was no longer available for these assessees.

The most important change in the development of e-filing in the country is the refunds, say tax experts.

“The Income Tax Department used to make the refunds through cheque which sometimes caused problems such as late delivery of returns which required legwork for the average assessee. Now, you get the refund directly credited in your account within a month of filing return,” says Naveen Wadhwa, DGM,

“The digital transfer and timely payment of refund emerged as the biggest positive step to encourage the assessees to file income tax returns,” he adds.

Pre-filled forms

Till about three years ago, the assessee had to go through the entire process of filling details such as salary and TDS breakups every time to file a return, explains Mr Wadhwa. “The I-T department is expanding the scope of pre-filled XMLs year by year. Today, other than basic information, even details such as interest and salary breakup are pre-filled,” he adds.

Online verification

“Until about 4-5 years ago, the taxpayer had to print the acknowledgement form ITRV, sign it physically and send it over to the Centralized Processing Centre (CPC), Bengaluru by mail. That whole process was long and costly for some. Today, once the ITR is filed, its verification can be done through Aadhaar OTP-based or electronic verification code (EVC)-based processes (in case of bank and demat accounts),” said Mr Wadhwa.

Initially, the government had provided Excel-based utilities which couldn’t whose limitation was that

“Though the ITR forms have not been simplified much, but they have come a long way in terms of structure, classification as well as numbering… Form applicability has definitely improved to a great extent,” Mr Wadhwa explains.

Online Platforms And Excel-/Java-Based Utilities

The introduction of Java-based utilities has eradicated the need for third-party software to file returns, especially using the ITR 1 and ITR 4 forms, say experts.

“The small taxpayer can complete, submit and verify the income tax return within 5-10 minutes in a really easy process today,” adds Mr Wadhwa.

In 2010, the taxman launched the two-page SARAL-II form for salaried taxpayers, and took a number of measures towards efficient tax administration the next year. These included an online facility for taxpayers to track the status of refunds and credit for prepaid taxes.

Also in 2011, the I-T introduced a simplified form, called ‘Sugam’, to reduce the compliance burden for small taxpayers (those falling within presumptive taxation).

Today, the Income Tax Department offers seven forms to the assessees for filing their income tax returns. Assessees must have thorough knowledge of the income tax form or ITR form applicable to them, say financial planners. For example, Form ITR 1 (Sahaj) is meant for resident individuals with income up to Rs 50 lakh from salary, one house properly or other sources.

In 2012, the taxman launched TRACES or TDS Reconciliation, Accounting and Correction Enabling System launched to serve as an integrated one-stop platform for the stakeholders to facilitate the services related to TDS operations.

In 2014, the Income Tax Department launched national website with enhanced features and content.

The taxman expanded the “e-Sahyog” pilot initiative in 2016 to reduce the compliance cost for assessees, especially small taxpayers. The project was aimed at providing an online mechanism to resolve mismatches in ITRs without requiring taxpayers to visit the income tax office.

CBDT’s Proactive Approach

The top decision making body of the I-T department today reacts to assessee’s concerns more rapidly, says Mr Wadhwa. “The CPC’s infrastructure has improved significantly and the response time has shortened,” he adds.

According to CBDT data, nearly 50 lakh people filed their tax returns online on August 31, 2019 – the last date for assessment year 2019-20. In past few years, the income tax portal often jammed temporarily due to heavy traffic on the last day of submission.

In August 2019, the Income Tax Department launched a “lite” e-filing facility on its e-filing portal, aimed at easing the filing of returns. It is a lighter version of the e-filing portal.

Source: NDTV Profit