Income Tax Department may do away with ITR-V

Neha Pandey Deoras / Mumbai Aug 05, 2012, 00:06 IST

If you file returns online, you may not have to mail the Income Tax Returns Verification (ITR-V) form next year. The Income Tax (I-T) department is working on a proposal where individual taxpayers, who do not have a digital signature, need not have to sign the ITR-V to complete the process of e-filing returns.
“There is work going on but I can't give any more details,” said an income tax official confirming the development but refusing to give further details.

At present, those filing returns electronically need to either sign digitally or physically. Those who don’t have a digital signature need to take a print out of the ITR-V after filing returns online and mail it to the Bangalore office of the I-T Department through ordinary or Speed post. Unless this procedure is followed, returns are not considered filed.
Sudhir Kaushik, Co-founder & CFO of TaxSpanner.com, says, “This will go live from next financial year, that is, after April 2013. But this year taxpayers would have to mail the ITR-V to the I-T Department’s Bangalore office.”
The I-T Department discussed the proposals with industry players like authorised e-return intermediary (ERIs) and sought their opinion 3-4 months ago. The proposal is likely to come up for clearance by September 2012.
Explains Saakar Yadav, MD of myITreturn.com, “According to my discussion with the department, this will work on a one-time pin or OTP, which will act as an authentication for the tax filer instead of a physical or digital signature. The OTP is similar to the pin number introduced in online banking transactions for security reasons.” This OTP may be linked to your permanent account number (PAN) to maintain the confidentiality and will be valid for may be five minutes at a time.
This is how the new process may work, if approved. Say you file your returns through an ERI. You register yourself and put in the details in your Form 16 in the form provided by the website and submit the same. After this, typically the ERI sends a mail saying you will receive your ITR-V in one to two days on mail, which you should sign and mail to the I-T Department. After this, if the draft proposal is accepted, the ERI will send an alert to the I-T Department about you having filed the returns with them. On receiving the alert, the tax department will send an OTP to your mail address or mobile number, registered with the department or given to the department when you last filed your return.
You need to feed the OTP on the ITR-V, in place of the signature, thereby completing the process of filing tax returns online.
The department wants to make the process of e-filing completely online. Also in the past two years, ERIs say, there are as many as 5-10 per cent e-filers who haven’t sent their ITR-V to the department. Over 10 lakh individuals file returns online actively

 Reason: Most do not know that they need to mail the ITR-V and many even find the process cumbersome. These individuals will not be able to file their returns and those who have refunds pending will not get it anymore