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E-filing vs Physical Filing of Income Tax Returns: Which is Better for Your Business?

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Last Updated on June 13, 2023 by Kanakkupillai

Paperless filing is safer, quicker, and more practical overall. While filing by mail can be less expensive, the income tax division must wait longer to process any owed refunds.

Given the preceding, we go over which sort of filing a business should pick for the benefit of our readers.

What is E-filing?

E-filing is the process of electronically submitting income tax returns and forms online. Returns and forms must be submitted electronically.

Key Takeaways

  1. E-filing offers numerous benefits such as prompt processing, better accuracy, convenience, confidentiality, accessibility to past data, and proof of receipt.
  2. E-filing is user-friendly, and the process can be easily completed by following step-by-step instructions provided on the income tax department’s website.
  3. Physical filing is an option for individuals who meet specific requirements, but it has drawbacks such as longer processing time and the need for manual data entry.
  4. E-filing provides anytime access to records, simplifies preparation through auto-population of previous data, allows easy tracking of return status, reduces errors in calculation, ensures faster refunds, enables easier revision of errors, and offers convenient document submission.
  5. Physical filing may be preferred by those who find it easier to fill out forms by hand and value the perceived security it offers.
  6. E-filing is generally considered the better option for businesses due to its efficiency, accuracy, and convenience, while physical filing may still be suitable for certain individuals based on their preferences and circumstances.

Benefits of E-filing

Taxpayers can greatly profit from e-filing, sometimes known as online tax filing.

The following are a few of these advantages:

  • Prompt processing: Income tax return acknowledgement happens quickly. Furthermore, refunds, if any, are processed more quickly than with paper-filed taxes.
  • Better accuracy: With built-in validations and electronic connectivity, e-filing software is seamless and significantly reduces errors. Paper filings are susceptible to mistakes. There is a chance of human error in data entry when a paper-based form is converted to an electronic system.
  • Convenience: Online income tax return filing is neither time nor location limited. You can file electronically at any time and from any location.
  • Confidentiality: Better security than paper filings because nobody can access your data accidentally or intentionally. Paper filings increase the risk that information about your income will end up in the wrong hands at the offices of the income tax department or your chartered accountant.
  • Accessibility to past data: You can readily view historical data while submitting returns. Most e-filing software securely preserves data and makes it accessible when filing subsequent returns.
  • Proof of receipt: As soon as you file and later, you promptly receive confirmation through email at the address you registered.
  • Ease of use: E-filing is user-friendly, and the clear instructions make it simple, even for people who are not particularly familiar with the Internet.
  • Electronic banking: Direct debit for tax payments and refunds, which is convenient. Among other convenience options, you can file now and pay later by selecting the day your bank account will be debited for your tax payment.

How to E-file ITR?

Step 1: Visit https://www.incometax.gov.in/iec/foportal

Step 2: Register or sign in to e-file your returns.

  • If you have already registered for the portal, click the “Login Here” option.
  • Click the “Register” button to sign up for the portal if you haven’t already done so.

Step 3: Click on “Taxpayer,” enter your permanent account number (PAN) information, and then click “validate.” Click “Continue” after that.

Step 4: Name, address, gender, place of residence, date of birth, and other information are required.

Step 5: Specify both your registered mobile number and email address.

Step 6: Click “Continue” after filling out the form.

Step 7: A 6-digit one-time password (OTP) will be given to your registered mobile number and email address after you have verified the information.

Step 8: Enter the OTP and follow the on-screen instructions to register properly.

Step 9: Once the OTP has been validated, a new window will open, asking you to confirm the information you have supplied. You can update any details you provided if wrong; another OTP will be delivered to authenticate the modification.

Step 10: The last stage is setting up a password and secure login message.

Step 11: Once you click “Register,” you will see an acknowledgement message informing you that the registration procedure was successful.

file income tax return online

Physical Filing of Income Tax Returns

People who meet specific requirements can file their income tax returns physically. The person can prepare and file the return at an income tax office. Taxpayers with a salary income and up to one residential property may file an ITR-1 SAHAJ.

Benefits of Physical Filing

  • Security: Paper filing might provide fewer security threats than e-filing, even though it may look like an easier procedure.
  • Easy to do: Paper filing is not a technology-reliant process like e-filing. Rather than attempting to enter data on a computer, some people find filling out a form by hand easier.

How to Physically File ITR?

Get the necessary forms at the income tax office or download them from its website if you are eligible and plan to file returns physically. Complete these forms, locate the income tax office or ward for which you are eligible on the website of the I-T department, and submit them there.

Drawbacks of Physical Filing

Before choosing to file on paper, think about the drawbacks listed below.

  • Longer processing time: Paper filing can take longer because it requires postage.
  • Less time to prepare: Whether or not to paper file depends on how long it takes to complete and mail your tax return. Waiting too long could result in missing the deadline and paying late penalties.

Comparing E-filing vs Physical Filing of ITR

The advantages of submitting returns online and the distinctions between the online and manual filing of income tax returns are fully covered.

Anytime access to records

  1. The biggest advantage of completing income tax returns online is that all your documents are uploaded to one platform and thus always accessible.
  2. Since you will have to do a lot of digging when completing your taxes, finding physical data in an emergency can be challenging with manual income tax return filing.

Simplicity of preparation

  1. The online ITR portal will save all your information when you complete your income tax return electronically. This makes it simple to file your returns the next time because you can auto-populate from previous data.
  2. When income tax returns are done manually, extensive return forms must be filled out by hand, increasing the chance of mistakes, which could lead to significant tax liabilities.

Tracking of status

  1. It is rather simple to track the progress of your return processing when you file your taxes online. You can find out if the Income Tax Agency has received and processed your return and if the agency is handling any requested refunds.
  2. If you manually file income tax returns, the status of your physically filed returns will not be available online, and the only way the income tax department can notify you of their status is by mail, which can result in a lengthy wait if you need to know the status of your returns right away.

Fewer errors in calculation

  1. Tax computations are error-free when you file your returns online, thanks to tax calculation programs and built-in data checking.
  2. If you file your income tax returns manually, you must manually calculate your income, deductions, and tax amounts. This could lead to mistakes.

Faster refunds

  1. Online refund processing is efficient and hassle-free.
  2. Return filing is typically delayed when processing is done manually. Additionally, payments for manually filed returns are delayed.

Revision of errors

  1. You can make changes and reviews when you file your income tax returns online. The data can be amended simply, and the forms can then be uploaded easily and hassle-free.
  2. Manually submitted returns can only be amended by filing a new physical form, which is laborious and time-consuming.

Convenient submission

  1. Online filing of income tax returns enables quick and easy document submission.
  2. The issue with manual filing is that many people wait until the last minute to file their taxes, resulting in long lines at tax offices and is once again time-consuming.

Verification

  1. You may save a ton of time by electronically verifying your income tax returns.
  2. Manual filing necessitates the time-consuming and arduous mailing of income tax returns to the tax office.

Conclusion

Finally, e-filing of income tax returns has become essential for Indian firms to follow tax rules. Even though e-filing is mandatory for some businesses, it is recommended that all businesses take advantage of its benefits, such as accuracy, simplicity, and cost savings.

By following the simple instructions to e-file their income tax returns, businesses may ensure timely compliance with tax regulations and benefit from the many benefits of e-filing. As e-filing technology evolves over the next few years, more businesses will likely use it to submit their tax returns.

Final recommendations

Although there are several benefits to online reporting to firm income tax returns, the process can still be difficult. Here, Kanakkupillai enters the picture. Kanakkupillai is a certified tax advisor who can help businesses with the entire e-filing process and ensure that all tax laws and regulations are followed.

For businesses looking for direction and assistance with compliance, taxation, and accounting, Kanakkupillai is a dependable resource. Because of its extensive knowledge, state-of-the-art technology, and unwavering commitment to client service, the company is in a good position to help businesses navigate the complexity of the Indian taxation system and achieve their financial goals.

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