The one major irritant in online filing of income tax returns may be eliminated this year. This is the offline process at the end of the online one, where you need to take a printout of what is called the ITR-V form, sign it, and mail it to the I-T department's centralized processing centre (CPC) in Bangalore.

Krishna Rao, who has just taken over as the I-T commissioner of the CPC, said the law and information technology ministries were examining the matter, and he was hopeful a solution would emerge soon. It's still not clear though if the new system would be in place by June-July , when the bulk of individual filings happen.

In the last fiscal, 1.65 crore returns were filed online, but ITR-V forms of as many as 25 lakh people were not received by the CPC. Many forget to send the forms in the stipulated 120 days; in some cases, these get lost in the post.

The I-T authorities need to be absolutely certain about the identity of the person filing the form, which is why it currently mandates a physical signature.

A digital signature is an option, but you need to pay to obtain a digital signature for yourself and that is not something everyone would want to do.

So the I-T department is looking at the option of what is called an electronic signature, where your identity is verified online through different ways, including a PIN that could be sent to one of your previously specified devices and which you can use to authenticate yourself.

Online filing has seen a surge ever since the CPC was established in 2009. The initiative is a collaboration of the I-T department with Infosys Technologies and TCS. TCS handles the frontend e-filing process, while Infosys handles the backend processing.
The 1.65 crore online returns filed last year is an 80% increase over the 91 lakh filed in 2010-11. It is also 50% of the total returns filed, which was 3.37 crore. Rao said he expects the online number to rise to at least 2.25 crore this year.

Online's popularity is a result of the faster processing and refunds that the CPC has enabled, and the elimination of bribes to obtain refunds. Sanjai Kumar Verma, who was in charge of the CPC from its inception and who is now I-T commissioner in the TDS division in Bangalore, said the average processing time, which used to be a couple of years some time ago, was down to 151 days in 2010-11, to 59 days last year, and is now further down at 40-50 days.

The efficiency that e-filing and the CPC brings are expected to free much of the I-T department's resources to do the things the department should actually be doing, which is to track black money and conduct investigations into tax frauds.

There have been hiccups along the way. An effort recently to upload previous years' paper filings by I-T offices around the country led to certain tax payments not being reflected properly. The result was that many assessees wrongly received arrear notices. "This is not a problem of the online process. Assessees can get in touch with the local administrative offices and have the issue resolved," Rao said.