DIY ITR preparation can lead to errors. Here’s where to seek help in tax filing

If you have multiple sources of income or find it challenging to manage the complexities, it is advisable to seek the assistance of a CA

The Income Tax department permits taxpayers to file their income tax returns (ITR) on their own, except when there is a requirement for auditing the books of accounts, particularly for business income.

However, many individuals lack the basic understanding required to file tax returns and might inadvertently make mistakes, rendering their returns incorrect or invalid. In such cases, it is sensible to seek the guidance of tax experts. Here are a few resources that can help.

Also read: The complete guide to income-tax filing

Do it yourself

In the last few years, the IT department has made significant strides in providing online services, making the process of ITR filing largely digital with only a few exceptions. For salaried individuals with no other sources of income besides their salary, the process of filing returns has become quite straightforward, as they can easily do so through the IT department's e-filing portal.

“Someone with salary and/or pension and/or interest income, etc. may not even need a chartered accountant’s (CA) help,” said Kuldip Kumar, Founder of Mainstay Tax Advisors. Therefore, you can file your returns for free using the IT department's e-filing portal.

But what if things get a bit hairy?

Tax return preparer

If you are filing your return for the first time and lack a thorough understanding of the process, you have the option of approaching government-approved Income Tax Return Preparers (TRPs). To aid taxpayers in preparing and filing their returns, the government introduced the Tax Return Preparers Scheme in 2006. Under this scheme, individuals are trained to become authorised TRPs.

A TRP can be any individual who has been issued a Tax Return Preparer certificate and a unique identification number by the relevant authority. To become a TRP one needs to have a bachelor's degree from a recognised Indian university or institution, or should have passed the intermediate-level examination conducted by the Institute of Chartered Accountants of India (ICAI), the Institute of Company Secretaries of India (ICSI), or the Institute of Certified Management Accountants of India (ICMAI).

To find a Tax Return Preparer (TRP) in your vicinity, visit https://incometaxindia.gov.in/Pages/tps/trp-details.aspx. Fill in the required details such as state, city, and PIN code. Upon submission, a list of registered TRPs in your area will be displayed, along with their TRP identity, names, contact information, and addresses.

TRPs receive incentives from the government for assisting in the filing of income tax returns. For example, if a taxpayer files her return for the first time, the TRP will receive 3 percent of the tax paid on the declared income as an incentive from the income tax department. For the second and third years, the TRP will receive 2 percent and 1 percent of the tax paid, respectively. However, if the incentive is less than Rs 250 in any year, the taxpayer must pay the TRP the difference. The maximum incentive a TRP can earn per return is Rs 1,000.

E-filing portals

The IT department introduced the Electronic Furnishing of Return of Income Scheme, 2007, enabling authorised intermediaries to electronically file the ITR on behalf of taxpayers. This scheme is accessible to any taxpayer who is assessed or assessable for tax. Many tax filers opt for e-filing intermediaries for assistance in filing their returns.

Also read: Can you file a revised return even after getting a tax refund?

E-filing intermediaries typically charge fees based on factors like sources of income, income level, complexities, or the applicable ITR form. For instance, Clear, an e-filing intermediary, charges Rs 299 (for income below Rs 5 lakh), or Rs 999 (for income above Rs 5 lakh) for ITR 1 or 4. For ITR 2 and 3, its charges range from Rs 1,198 to Rs 2,499.

Myitreturn allows free usage of their platform for income up to Rs 5 lakh, and charges Rs 199, Rs 500, and Rs 1,000 for income up to Rs 10 lakh, Rs 20 lakh, and above Rs 20 lakh, respectively, from salary, pension, and other sources. TaxManager's charges start from Rs 250 and go up to Rs 4,000.

Before choosing an e-filing intermediary, ensure they are authorised by the IT department, as you will need to share critical information with them, including personal, income, and bank details. To check their authorisation status, verify their name on the IT department's website under the list of registered e-return intermediaries. You may also request their user ID and organisation name to confirm their validity.

Chartered accountants

If you have multiple sources of income or find it challenging to manage the complexities, it is advisable to seek the assistance of a CA. Moreover, in situations that require tax audits, balance sheets, etc., consulting a CA becomes a necessity.

Also read: What is AIS and how does it help in filing your income-tax return

“CA’s can provide effective tax planning in order to optimise tax savings for their clients, ensure accurate and compliant filing of ITRs, minimise errors, and ensure the completeness of disclosures such as foreign assets/incomes, foreign tax credits (if any), directorship, etc., and also make sure that other incomes are correctly computed,” said Suresh Surana, Founder, RSM India, a tax consulting firm.

"Those with income from capital gains, crypto, or foreign sources may benefit from the help of a CA in terms of taxation and reporting of such income, and also to avoid double taxation, where the income from a foreign source is doubly taxed, i.e. in India and in the other country,” said Kumar.

Typically, CA firms may charge as little as Rs 3,000 to 5,000 for their services. However, the fees can vary significantly based on the scale of the business and the complexity of income computation, and may even extend to lakhs. “The fees charged by a CA for filing ITRs vary based on several factors, such as the complexity, the level of expertise required for preparing such returns, the transaction volume, the time required, the location of the CA's practice, etc,” said Surana.

Choose any of the aforementioned methods to file your return before the due date — July 31, 2023.