Why e-filing of returns is about to get easier this year

Starting this year, e-filing of income tax returns is going to get easier.

While millions of Indians have taken to e-filing to avoid unpleasant trips to tax offices in various cities every July, the hassle of physically having to send a copy of the e-filed return to an address in Bangalore - which houses the central processing cell (CPC) for income tax- has remained. The only way to avoid this physical dispatch of e-returns is to obtain a digital signature.

Now, the taxman has had a change of heart. From this year, even if you do not have a digital signature, you no longer have to send a hard copy of the returns filed electronically through Speed Post to the CPC.

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According to this Business Standard report, you can use an electronic signature that the taxman will himself generate. In a taxpayer-friendly initiative, the tax authorities have decided to provide the taxpayer with a special password-protected PIN number with which one can file returns online without a digital signature or without sending the hard copy of your e-filings to the tax department.

 "The e-filer will be required to provide certain information on the income tax website related to the previous year’s return. If the information matches the details already available with the department, a unique Personal Identification Number (PIN) would be sent to the taxpayer through mobile phone and email. The taxpayer will have to enter this PIN at the time of e-filing the return," it said.

From assessment year 2012-13 (i.e. financial year 2011-12), e-filing has become compulsory for companies and individuals with incomes above Rs 10 lakh per annum.

Digital signatures cost about Rs 1,000 to acquire from authorised agencies like the National Securities Depository Ltd or MTNL and they are valid only for a year. But with the tax department now proposing to supply as PIN to e-filers, digital signatures will no longer be necessary. An electronic signature will do.

The taxman’s electronic signature will, however, be valid only for e-filing and cannot be used for other purposes.