Considering just how much less paperwork and expenditure it would mean, the taxman moving to a one-time password (OTP) based e-filing verification for taxpayers is the right step towards the modernisation of tax administration. A large number of tax payers tended to skip posting a signed physical copy of the ITR-V to the income tax department’s Central Processing Centre in Bengaluru within 120 days of filing returns online, having assumed that the process was complete with just e-filing. But the taxman deems the process incomplete if the hard copy doesn’t reach Bengaluru in time. Thus, the process, so far, had not become a fully paperless one.
The new OTP-based verification can be undertaken using internet banking, ATM, Aadhaar and e-mail. While the new mechanism allows for taxpayers with annual income under Rs 5 lakh and no refund claims to generate the electronic verification code and validating her returns through her registered mobile number and e-mail id, in case her PAN is flagged for any adverse observation from the taxman, the assessee will not be allowed the direct verification and has to choose from the other methods like internet banking, ATM along with Aadhaar verification.
Given Aadhaar authentication is assumed to be failsafe, the OTP generated for an Aadhaar-verified filer will remain valid beyond the 72 hours stipulated by the new guidelines from the Central Board of Direct Taxes. The method does away with the hassles (both for the taxman and the taxpayer) that accompanied the process earlier—postal delays, illegible signatures, etc, left many e-filers without the tax department’s acknowledging their filing. With time elapsing between filing and verification brought down to just seconds, refunds are expected to be faster, too. Perhaps, the taxman could think of making this compulsory, instead of keeping it optional as it has done for now.