E-filing and Manual Filing: Which Income Tax Return Method is Best?

An Income Tax Return (ITR) is a document utilized to report your total taxable income for a specific fiscal year. It serves as a formal declaration of your income, the deductions you’ve claimed, the exemptions you’re entitled to, and the taxes you have already paid. Consequently, it determines your overall income tax obligation for that fiscal year.

Submitting an Income Tax Return (ITR) is crucial for contributing to national development and provides numerous advantages. It enables you to receive TDS refunds, simplifies loan application processes, and allows for the carry-forward of losses. Furthermore, you can take advantage of deductions and exemptions as outlined in the Income Tax Act,1961.

What is E-Filing?

The act of submitting income tax returns/forms online via the Internet is referred to as e-filing. There are three methods to file income tax returns electronically:

E-File using a Digital Signature Certificate (DSC): No additional steps are required once it is filed with a DSC.
E-File without a Digital Signature Certificate: In this scenario, an ITR-V Form will be produced. Within 30 days of e-filing, this form must be printed, signed, and delivered to CPC, Bangalore, by regular mail or speed mail (without acknowledgment). Once the ITR-V Form is submitted, no further actions are needed.
Use an e-Return Intermediary (ERI) to electronically file your income tax return, with or without a Digital Signature Certificate (DSC). If filed without a DSC, the taxpayer must still verify the return, either by sending the signed ITR-V to the CPC or through electronic verification methods.

The Income Tax E-Filing Portal, managed by India’s Income Tax Department, makes the process of filing tax returns online more efficient. It provides an intuitive platform for registering and logging in using PAN, completing various ITR forms, and e-verifying returns through Aadhaar OTP, net banking, or DSC. Taxpayers can monitor the status of their refunds, request corrections, and file grievances.

What is Manual Filing?

Individuals who meet specific criteria have the option to submit their income tax return in person. When filing in person, the individual can complete and submit their return directly at an Income Tax Office. Taxpayers with a salary income and a maximum of one house property can use the ITR-1 form for their return filing. To manually file an income tax return, the taxpayer must be 80 years of age or older during the financial year. The taxpayer’s total gross income must be less than five lakhs, and there must be no claim for an income tax refund.

When a taxpayer files their income tax return manually, they need to print two copies of Form ITR-V. One copy should be kept by the taxpayer, while the other copy, signed by the taxpayer, must be mailed to: Post Bag No. 1, Electronic City Office, Bengaluru—560 100, Karnataka.

Comparison of E-Filing and Manual Filing

Anytime Access to Records

Digital filing allows all documents to be kept on a centralized platform, accessible at any moment.
In contrast, retrieving physical files during emergencies with manual filing can be challenging.

Simplicity of Preparation

E-filing retains previous data on the platform, enabling automatic filling of information for future filings.
Manual filing requires completing extensive forms, which heightens the risk of mistakes and potential tax liabilities.

Tracking of Status

Online filing makes it straightforward to monitor the status of returns, refund requests, and processing updates.
On the other hand, manual filing depends on postal services, which can be slow.

Fewer Errors in Calculation

E-filing utilizes tax calculation software, ensuring accurate computations.
Manual filing involves manual calculations, which increases the likelihood of errors.

Faster Refunds

Refunds processed through e-filing are typically quicker.
In contrast, manual filing can cause delays in both processing and refund issuance.

Revision of Errors

Corrections to online submissions can be made easily and re-uploaded.
In manual filing, errors require a new physical form to be completed, which is cumbersome.

Convenient Submission

E-filing offers convenience, removing the need for last-minute lines.
Manual filing often leads to prolonged waiting at tax offices.

Verification

E-verification is efficient and saves time.
Manual filing necessitates sending physical returns to the tax office, which can be laborious.

Practical Tips for Choosing the Right Method

Evaluate the intricacy of your income and deductions.
Assess your familiarity with digital tools.
Think about the time and effort you can dedicate to tax preparation.

In Conclusion

Both electronic filing and manual filing offer unique benefits and limitations. E-filing is quick, generally less prone to mistakes, and provides quicker processing times, making it the favored option for the majority of taxpayers. Manual filing may still be suitable for seniors or those with straightforward income situations who are not as comfortable with technology. No matter which method you choose, filing accurately and on time is essential for compliance and helps taxpayers steer clear of penalties. Select the method that most closely fits your needs and preferences.

Also Read: Employment Law in India: Employee Rights and Employer Obligations

References:

Kshetry and Associates