Filing the income tax return is quite a simple job. There are different ways to do it. Broadly, there are 3 ways you can do the return filing in India. Firstly, you can hand over all the papers to your chartered accountant with the Form 16 and the Form 26AS and they will manage the entire process of preparing the returns as well as filing the returns. You can then download the acknowledgement directly from your login area in the Income Tax Website. Alternatively, you approach and register online with any of the online filers like Clear Tax or H&R Block and they will ask you to mail all the relevant documents by email.
Normally, the charges for online filing is lower than offline filing because the entire process is almost menu driven and you only use the readymade templates of the tax filer software to file your returns. The raters could vary from Rs.500 to Rs.1000 for filing services and could go higher in case you opt for any additional special services. Lastly, the simplest and the cheapest method are to file your returns online. You can directly log into the Income Tax Website and log in using your PAN card as user name and your password. Once that is done, you can do the entire tax filing via a very user-friendly excel software. Once the process is completed and checked you can just convert that into an XML file and file it online. The acknowledgement has to be verified either through physical signature, Aadhar authentication, digital signature or trough online banking verification.
What are the costs entailed in filing of tax returns?
As stated above, filing through a chartered accountant may entail a cost of Rs.1500-2000 for the filing depending on the complexity of transactions in your tax returns. The online filing via syndicators like Clear Tax and H&R Block is still lower and costs anywhere between Rs.500 to Rs.1000 for filing of returns. But the cheapest and most economical way to file returns is by directly logging into the website of the Income Tax department and following the right instructions and using the right form. The process is menu driven so there is no rocket science involved in the process. Unless there are too many complexities in your tax filing, it is always better to do it on your own. It hardly takes an hour if all your documents are ready and in place.
Filing returns with Tax Return Preparers (TRP) scheme, 2006
For first time tax payers, there is an interest scheme called the TRP scheme which was launched in 2006 with a view to incentivizing of employment generation in the service sector. The TRP gets an incentive of 3% of the tax paid by an individual or Rs.250 per return, whichever is higher. This is a basic minimum assurance to the TRP. Let us understand this calculation more clearly. Suppose your total Income-tax payment for the financial year 2016-17 comes to Rs.12,000. Let us presume that this is your first year of filing your Income-tax Return. Now in this situation the Income-tax Department would pay Rs.360 (3% of Rs.12,000) as incentive to the TRP. Since the incentive is already more than the minimum payment of Rs.250, you have to pay nothing. In another instance, let us assume that you are first time tax payer and your tax paid is Rs.7,000. The TRP in this case receives Rs.210 (3% of Rs.7,000) as an incentive and you will have to shell out the balance of Rs.40 to the TRP for filing the Income-tax Return. The maximum fee in the first year cannot cross Rs.1,000 and from the second year onwards the fee is restricted to Rs.250.
As a taxpayer, you have different options to choose from for filing your returns. It is always better you use the own filing method which costs nothing and you also get to learn the nuances of taxation. Also, most of the tax advisors cannot give you a proper advice on tax saving and it is best you consult with your financial advisor for this purpose. Above all, ensure that the tax savings investments that you make are in sync with your overall financial plan and your overall investment allocation.