Update Date : 19-Dec-2024

Created Date : 18-Jul-2024

Reference : ET Wealth

Many people share their income tax e-filing portal password and PAN number with a hired CA to file their income tax returns (ITR). While this is a common practice, it poses a risk of the ITR e-filing portal password being leaked, which could be exploited by malicious actors.
 
There are many CAs who have been filing ITRs for generations of families. However, if you are uncomfortable with this traditional arrangement or if you are having trouble finding a CA whom you can trust with your ITR e-filing portal credentials, then there is now the compelling alternative option of e-Return Intermediaries (ERIs). You don't need to share your e-filing ITR portal password with an ERI for filing ITR.
 
ET Wealth Online explains how this process works and how you can file your ITR using ERIs.
 
 
WHAT IS ERIS?

e-Return intermediaries are authorized intermediaries who are there to help taxpayers in the income tax return filing process. These intermediaries are allowed by the Income Tax Department to file ITRs and perform other functions on behalf of taxpayers.

 
According to Amarpal S. Chadha, Tax Partner and Mobility Leader, EY India, "E-Return Intermediaries (ERIs) are accredited experts authorized to submit income tax returns for taxpayers. Individuals can file their income tax return online directly or through these authorized intermediaries."
 
According to the income tax department website as of July 15, 2024, there are three types of e-return Intermediaries:
 
Type 1 ERIs: They can file ITRs and fill forms if needed, using the Income Tax Department utility or third-party utility software approved by the department.
 
Type 2 ERIs: They create their own online software application or a portal to file ITRs and fill forms if needed, on the e-filing portal through an application programming interface provided by the tax department.
 
Type 3 ERIs: They develop their own offline software utilities instead of using the Income Tax Department utility available on the e-filing portal to enable users to file their ITR and fill forms if needed.
 
According to the Income Tax Department website, as of July 15, 2024, there are 50 ERIs including EY (Type 1 and 2), Cleartax (Type 2), Tax2Win (Type 2 and 3), etc. Click here to get the full list of ERIs including their registered address and phone number.

https://eportal.incometax.gov.in/iec/foservices/#/eriList

Experts say that not everybody can become an ERI as there exist certain eligibility criteria. "There is an eligibility criteria defined for the ERI which includes a Chartered Accountant or a firm of Chartered Accountants. Moreover, in order to be an ERI, one needs to undergo the detailed registration and approval process defined by the National Securities Depository Ltd (NSDL)," says chartered accountant Aastha Gupta, partner, S.K Gulati and
associates.
 
HOW DO THE DIFFERENT TYPES OF ERIS WORK AND HOW TO SELECT WHICH ONE IS BEST FOR YOU

According to Abhishek Soni, co-founder, Tax2Win, ERIs are entities or individuals authorized by the tax department to help taxpayers file their ITRs electronically.

 
 
ACCORDING TO SONI, HERE ARE THE SERVICES YOU CAN EXPECT FROM TYPE 1 ERIS:

• 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," says Soni.
 
 
 
ACCORDING TO SONI, HERE ARE THE SERVICES OFFERED BY TYPE 2 ERIS:
 
• Type 2 ERIs have a broader role compared to Type 1. In addition to the services offered by Type 1 ERIs, they can.
 
• 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.
 
Although anyone can use the services of a Type 2 ERI, these are more suitable for handling complex, large data. "These ERIs are useful when you need to handle bulk filings, thus making them suitable for organizations needing to file returns for multiple employees or members," says Soni.

 

HOW TO INITIATE THE PROCESS OF AVAILING SERVICES FROM AN ERI?

Experts say you have to authorize the respective ERI first. According to the income tax department's e-filing ITR portal, there can only be one active ERI at any given time.
 
As per Soni, here's how the process works:
 
 
 
STEP 1: INITIATION OF 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.

 
 
STEP 2: GENERATION OF OTP

• When uploading the return or completing any authentication required on the income tax portal, the ERI will initiate the OTP request.

 
 
STEP 3: 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.
 
 
STEP 4: 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.
 
 
STEP 5: 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 similarly.
 
 
STEP 6: ACKNOWLEDGMENT

• After successfully filing the return, the income tax department will acknowledge the filing for the taxpayer and ERI.

• The ERI may provide the taxpayer with a copy of the filed return and acknowledgment for their records.
"Also, if a taxpayer wants to file their income tax return through their CA, the CA can use their ERI (e-Return Intermediary) login and add the taxpayer as their client to file the ITR. The other method is, the taxpayer adds the ERI on his Income Tax Portal and authorizes him/her," says Soni.
 
"ClearTax has full integration with Income tax department utility APIs and hence users don’t have to share any IT portal login credentials with us," says Avinash Poleppaly, senior director -product and business head at Clear.
 
 
WHO IS RESPONSIBLE FOR THE ACCURACY OF THE FILED ITR THROUGH ERIS?

If there is an error in the filed ITR, it could be either due to faulty data given by the taxpayer or an error in data processing by the respective ERI or its software. "The question of who is responsible for the error may depend on the facts as well as the terms of the contract agreed between the taxpayer and the ERI," says Chadha from EY India.

If there is any error or discrepancy in the income tax return filed, the tax department can contact the taxpayer to seek explanations or clarifications on the data provided in the ITR and not the ERI.
 
According to Ashish Mehta, Partner at Khaitan & Co, a law firm, "The primary responsibility for filing an accurate and correct ITR always remains that of the taxpayer. The role of an ERI is largely mechanical, and their obligation is merely to ensure that the data entered by them is in accordance with the documents provided to them. As such they don't conduct an independent diligence regarding the accuracy of the claims/tax positions adopted by the taxpayer while filing the e-return."
 
If it could be proved that the data reported in ITR is inaccurate and the fault of the ERI, then you may file a suit. "In case of any errors on the part of the ERI in filing return (such as delay in filing return, errors in data entry, etc.), the taxpayer may be able to seek contractual/judicial remedy against the ERI in accordance with their contractual arrangements," says Mehta.
 
According to Rubal Bansal Maini, Partner, Luthra and Luthra Law Offices India, "As per the Electronic Furnishing of Return of Income Scheme, 2007, a registered e-return intermediary may file ITR on behalf of an eligible person. Under Rule 11 of the said Scheme, an ERI is required to ensure that an eligible person has quoted a correct and valid PAN and that the particulars of advance tax, self-assessment tax and tax deducted at source are in accordance. Under Rule 8 of the said Scheme, an ERI will act as an agent of an eligible person, therefore, the eligible person will be responsible for filing an accurate and correct ITR."

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