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E-Return Intermediary - Eligibility and Benefits

Updated on: 17 Jul, 2024 06:24 PM

In the age of digitalization, the process of filing tax returns has evolved, and with it, the role of E-return Intermediaries has gained significance. To promote e-filing of returns, the Income Tax Department introduced a scheme called Electronic furnishing of return of income scheme.

E-return intermediaries serve as crucial guides in the intricate world of tax compliance, ensuring taxpayers navigate the process smoothly and efficiently. In this guide, we will explore what is e-return intermediary, their eligibility criteria, prerequisites, e-return intermediary registration process, roles, responsibilities, and the numerous benefits they bring to the table.

Contents

Who are E-return Intermediaries?

Taxpayers are required to either submit their returns electronically or through an intermediary or liaison. The individuals who are authorized and appointed by the Income Tax Department to assist taxpayers in filing their tax returns are known as e-return intermediaries. Anyone who wants to work as an e-return intermediary has to register themselves online with the NSDL if they meet the eligibility criteria at the time of submitting the application.

What is the Eligibility Criteria for E-return Intermediaries?

Before submitting the application, it is important first to check if you are eligible to become an e-return intermediary. Given below are the eligibility criteria for becoming e-return intermediaries -

  • A public sector organization or company that has a valid PAN number.
  • Any company that has a net worth of more than Rs.1 crores has been formed and registered in India and has an authentic PAN.
  • Any organization consisting of Chartered Accountants that has an authentic PAN.
  • Any organization consisting of advocates that has an authentic PAN.
  • Any organization consisting of Company Secretaries that has an authentic PAN number.
  • Any Chartered Accountant with a valid PAN.
  • Any Advocate with a valid PAN.
  • Any Company Secretary with a valid PAN.
  • Any person who is authorized to file ITRs only if they have a valid PAN.
  • Any government department drawing officer who has a valid PAN.
  • Any cost accountant with a valid PAN.
  • Any organization of Cost Accountants with a valid PAN.

What are the Prerequisites of E-return Intermediaries?

In order to apply to become an e-return intermediary you need to have the following in place.

  • You must have a class II or class III Digital Signature Certificate acquired through a licensed certifying authority approved by NSDL. This helps in digitally signing and approving the uploaded returns and submitted applications. The DSC should be in the name of the applicant
  • The entity should have the following hardware -
    • A Central Processing Unit (CPU) of more than 500 MHz.
    • Minimum 256 MB RAM.
    • Screen resolution of 800X600 pixel with 256 colour display monitor.
    • Exclusive storage space of minimum 20GB on the hard drive.
    • A UPS to generate a power backup of atleast 30 minutes.
    • A CD writer, DAT drive that can be used for backup
    • A printer
  • It should have the following software -
    • Windows 98 or higher operating system.
    • An anti-virus software
    • A browser higher than IE 6.0.
  • Good speed internet connection.
  • The computer system of the e-return intermediary should only have programs allowed by the Income Tax Department and should also have the required data security process.
  • It should possess a due diligence certificate acquired from the authorised ISA or CISA professional.
  • The entity or the individual should not have a criminal record.

What is the E-return Intermediary Registration Process?

E-return intermediaries should follow the procedure mentioned below to complete e-return intermediary registration process -

  • If you or your company is eligible to become an e-return intermediary has to register themselves with NSDL online by filling and submitting relevant registration forms. Physically submitted applications are not considered valid.
  • As soon as the application is verified and confirmed a screen will appear displaying a 15-digit acknowledgment number.
  • You must save, download and print the acknowledgment.
  • Submit this signed acknowledgment to the NSDL with the following -
    • Eligibility proof
    • Certificate of due diligence
    • A fee of Rs.4000 for registration
    • PAN card or TAN card.

What are the Roles and Responsibilities of E-return Intermediaries?

Before you apply for becoming an e-return intermediary, it is important to understand its roles and responsibilities -

  • To assess the eligibility of the taxpayer to avail of the scheme.
  • To check the authenticity of the PAN and TAN of the taxpayer.
  • To cross verify the information in the documents submitted with the information of TDS, self-assessment tax and advance tax.
  • To make sure that the taxpayer has entered correct information on the physical return.
  • To ensure that the data mentioned in the ITR is correct and accurate.
  • To make sure that the ITR is filed online within the prescribed time.
  • To ensure that the taxpayer has verified his/her ITR.
  • To make sure that the data relevant to ITR filing is retained for minimum 1 year after the end of the assessment year.
  • To make sure that the taxpayer receives a copy of the e-return and the acknowledgment of ITR-V form.
  • To ensure the confidentiality of the client’s data.
  • To check and ensure that the people working under them are following all the rules, conditions and provisions outlined.
  • To make sure that if there are changes in the data of the application submitted, it is intimated to the registrar.
  • To make sure everyone adheres to the rules and regulations laid out by the e-return administrator.

What are the Benefits of an E-return Intermediary?

There are numerous benefits of filing ITR online. Listed below are some of them -

  • Less time consuming: Filing through an intermediary is less time consuming as an e-return intermediary knows everything about filing taxes and has a lot of experience doing it. Its a less cumbersome but more convenient way of filing your ITR.
  • Quick refunds: Filing returns through e-return intermediaries also help you get refunds quickly within 1-2 months.
  • Security and Confidentiality: All the information provided by the taxpayer remains secure and confidential if sent through an e-return intermediary.
  • Accurate filing: Taking the help of e-return intermediaries also helps avoid errors, mistakes, and inaccurate information while filing an ITR.

E-return intermediaries play a pivotal role in simplifying the tax return process for individuals and organizations alike. Their eligibility criteria, prerequisites, and responsibilities are carefully designed to ensure the accuracy and security of tax filings. By leveraging their expertise, taxpayers can save time, receive quick refunds, and enjoy the peace of mind that comes with accurate and confidential filing. As technology continues to shape the tax landscape, E-return intermediaries stand as invaluable allies in the journey toward financial compliance and peace of mind. If you also want help with filing your taxes, the best idea is to hire an expert to ensure a seamless filing experience. Book eCA Now!

Frequently Asked Questions

Q- If a taxpayer does not want to share the password of the tax filing website then how will the ERI process work?

Taxpayers are often not willing to share their tax filing website credentials with a third party as it can result in financial frauds and is sensitive information. An E-return Intermediary (ERI), is a company or software that files income tax returns for you electronically. Here’s how it works -

Initiating the Process:

  • The taxpayer provides the information and documents to the ERI without sharing their income tax portal password.
  • The ERI prepares the income tax return based on the provided information.

Generation of OTP:

  • When it’s time to upload the return or complete any authentication required on the income tax portal, the ERI initiates the OTP request.

Receiving the OTP:

  • The OTP is sent to the taxpayer’s registered mobile number and/or email ID linked with their income tax account.
  • To receive the OTP, the taxpayer needs to ensure that their contact details are up-to-date on the income tax portal.

Sharing the OTP with ERI:

  • Once the taxpayer receives the OTP, they must provide this OTP to the ERI.
  • This can typically be done via phone call, email, or any other secure communication method agreed upon by the taxpayer and the ERI.

Completion of Filing:

  • The ERI uses the OTP to authenticate the taxpayer’s identity on the income tax portal and completes the return filing process.
  • If additional OTPs are required during the filing process, the taxpayer will receive them and need to share them with the ERI.

Acknowledgment:

  • After successfully filing the return, the Income Tax Department acknowledges it.
  • The ERI may provide the taxpayer with a copy of the filed return and acknowledgment for their records.

The process is straightforward and can be completed quickly, ensuring timely filing of the return. Also, if a taxpayer wants to file their income tax return through their CA (Chartered Accountant), the CA can use their ERI (e-Return Intermediary) login and add the taxpayer as their client to file the return.

Q- How does ITR filing through Type 1 ERI and Type 2 ERI work?

Entities or individuals authorized by the tax department to help taxpayers file their Income Tax Returns (ITR) electronically are known as e-return intermediaries or ERIs.

Type 1 ERI: Type 1 ERIs are essentially third-party service providers who help taxpayers with their ITR filing. They:

  • Collect necessary information and documents from the taxpayer.
  • Prepare the ITR based on the provided data.
  • File the ITR electronically on behalf of the taxpayer.

These ERIs are useful for people who might find the ITR filing process complex or time-consuming and prefer to have a professional handle it.

Type 2 ERI: In addition to the services offered by Type 1 ERIs, Type 2 ERIs can also:

  • Offer additional services like tax planning and consultancy.
  • Provide tools and software for taxpayers to prepare and file their own ITRs if they choose to.
  • Handle bulk filings, making them suitable for organizations needing to file returns for multiple employees or members.

Q- Who is liable for any error in the return filed through ERIs Type 1 or Type 2, the taxpayer or the respective ERI?

An ERI is responsible for maintaining the accuracy of the returns filed on behalf of the taxpayers. If the taxpayer provides the correct information, however, there is an error from the ERIs end, then, the ERI is responsible for rectifying the error and the consequences arising from it. The ERI must take immediate steps to rectify the error including filing a revised return or addressing any discrepancies with the tax authorities. If the ERI is not able to resolve the matter, the taxpayer might have to get legal or professional help to make sure the matter is handled well.

It's advisable for taxpayers to maintain thorough documentation and correspondence with the ERI to support their case in the event of any disputes or issues.

CA Abhishek Soni
CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2Win.in. Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.