Why you should make use of digital signature for e-filing tax returns
February, 25th 2019
If you have not filed your income tax return for financial year 2017-18, you can still do it before March 31, 2019, but with a penalty of Rs 10,000, and Rs 1000, if you earn less than Rs 5 lakh.
One of the important parts of filing income tax return (ITR) online is digital signature-an electronic form of signature to authenticate the electronic documents-as it lets you file your ITR in an easier and more secure way. Besides, as per revised provisions under section 44AB of Income-Tax Act, it is mandatory for individuals and professionals having an annual gross receipt of Rs 25 lakh and above to e-file their returns. The business houses, with annual turnover of Rs 1 crore and above, are also required to file ITR online.
For digital signature, you need a digital signature certificate (DSC) issued by licensed Certifying Authorities (CAs) approved by the Controller of Certifying Authorities (CCA), Government of India. There are less than 10 DSC certifying authorities in India. These include Tata Consultancy Services (TCS), eMudhra, NSDL, National Informatics Center (NIC), Capricorn, and more.
The DSC comes in the form of a USB token. The DSCs are typically issued with one-year or two-year validity. These are renewable on expiry of the period of initial issue. Pricing of DSC includes a one-time cost of USB, the cost of issuance of DSC and the renewal cost after the period of validity. The issuance cost varies and is market driven across all certifying authorities.
One of the advantages of filing ITR via DSC is you need not verify the return using Aadhaar-based OTP or send the signed hard copy of ITR-V to the CPC Bengaluru.
"DSC provides you a high level of security for your online transactions by ensuring absolute privacy of the information exchanged. You can use certificates to encrypt information that only the intended recipient can read," says Arvind Srinivasan, SVP, Strategic -Global Initiatives, eMudhra, a CCA-licensed digital signature provider.
The company's 'emSigner' product, a cloud-based eSignature and paperless office solution, allows GST taxpayers to sign invoices easily in bulk or individually. "From a taxation perspective, the biggest use case is signing invoices for GST purposes, which require the use of legally valid digital signature certificates," Srinivasan adds.
eMudhra has issued over 45 million digital signatures so far. It has presence in 38 countries across four continents. On enterprise side, its clients include Kotak Mahindra Bank, State Bank of India, Bharti Airtel, Flipkart, Hyundai, Deutsche Bank and DBS.
The company recently launched emBlock, a Blockchain-based system that can help optimise trade finance and logistics and the information shared between different legal entities by streamlining the process, speeding up the response time, providing transparency, and better flow. For example, when a shipment of assets crosses borders, it requires approvals from multiple legal entities; customs, port authorities or rail transportation firms as goods move between exporter and importer. "Here, Blockchain can be used to sign approvals, notify all parties that the asset has arrived and ultimately transfer the money from the importer to the exporter's bank," explains Srinivasan.
The eMudhra chairs the India Public Key Infrastructure (PKI) Consortium, a body aimed at spreading awareness about digital signatures to drive the Digital India initiative. Under this forum, the company organises events where key stakeholders are invited, innovative solutions and use cases are showcased, and general awareness is raised towards the subject.
The company actively focuses on the Chartered Accountant (CA) community to educate them of the benefit of going digital. "Since the CA community assists many end-clients (individual and corporate income tax filers), this proves effective in getting the message out," says Srinivasan.