To be honest, the Indian government's e-filing site is good enough for a vast majority of tax payers. The interface is simple and fast. If you have a digital signature there is no need to mail any hard copies of any documents.
Meanwhile, ClearTax is really helpful if your returns are complicated. You have 3 houses, own stocks and a business etc. If you sign up for their gold package, a dedicated CA will assist you in all your returns and is available throughout the year over phone or email.
Mine was this use case, had stocks, had rented house, had some income from interest. While it took something like 45 minutes to file but they some how helped me save me rs. 4000 in their calculation and I had to pay nothing and that was cool. I wish if anyone could come up similar for small business accounting and tax then my startup dream will be realised product is ready but process of setting up company seem to be very difficult
Why anyone else :). I'll be surprised if a small business accounting offering isn't on ClearTax's product roadmap. It's high time companies like eLagaan got killed - they are just ripping customers off. To obtain a company PAN - they are charging 1000 INR which costs 100 INR if you apply online.
This year they have come up with something called netbanking verification. With that you don't have to mail any documents even if you don't have digital signature. If I remember correctly, there are other means of verification in addition to netbanking.
They just sent me an OTP on my phone. Thats it. Verification done. Then, as you mention, people can also log in to their net banking portal and verify, since the account would be linked to your PAN card. So in conclusion, most people should not need to send any hard copy at all.
I took up a job outside India this year, and lost my India number. Now I just can't use the netbanking verification. I still haven't mailed the documents :/
You need to convert your accounts (legally required once attaining NRI status) to NRO/NRE status and then you will receive OTP on your email. This is the case atleast with ICICI.
Previously had to close the resident account and then open new NRO/NRE accounts. But now it seems just changing the status of your old accounts and it retains the old numbers.
And I dont think their services are that good also , I was assigned a CA but got no response from them even after 3-4 messages and mails sent . I was frustrated to the point that I stopped caring and got one locally .
Meanwhile, the IRS is still stuck in the dark ages, it's pretty disgusting. California's return is online and hasn't required a third-party for several years now, so we know what is possible.
By comparison, I've seen the online tax system in New Zealand and it is a breath of fresh air, everything is already entered for you, and of course a lot simpler. It's just a matter of following a short wizard to add additional exemptions or what have you. It takes about 30 minutes to read the instructions and finish, very doable for the lay person. Their banking system also makes the US look like it's in the stone age, but don't get me started.
Overall the situation in the US is quite shameful for the country that invented the internet.
Heck, the IRS actually had an automated easy file system[1] but it was discontinued in favor of making you file electronic returns with for-profit third parties.
> Why blame the company, instead of the individuals that voted for these representatives that are essentially getting "bribed".
Out of the three actors (well, one is a heterogenous set of actors, but still) involved (company, reps, and voters), only one is not engaged (at least, as far as this transaction goes) in a corrupt act.
So, while certainly they would be well-advised to impose some accountability at the ballot box for the corruption, they are the least to blame for the actual corrupt act (unless, of course, evidence is presented, that has not as yet been, that they should have expected that the particular representatives were more likely to engage in this kind of corrupt behavior than the alternatives they actually had when they elected them, and they elected them anyway without legitimately supervening reasons.)
Because the company is the one who "bribed". I honestly do not understand this thought that a company should be able to do whatever they want, with no consequences, because they're trying to profit.
Who is saying that a company should be able to do "whatever they want", "without consequences"? For profit, or any other reason. Not even Libertarians and Anarcho-Capitalists believe that. So either you have some odd way of thinking about it, or you're constructing a fictional straw-man.
You're the one asking why the company should be blamed. You wouldn't be doing that if you didn't think that a company should be able to do stuff like this.
So believe it or not, there exist legit reasons for applications to have office hours, and they're spelled Legacy Systems.
Imagine you've got a crufty COBOL mainframe somewhere, of which the IRS has lots. (The Social Security Administration has millions of lines of production COBOL, even in 2015. See: http://oig.ssa.gov/sites/default/files/audit/full/pdf/A-14-1...) Like most systems of the era, it differentiates interactive jobs and batch jobs. The batch jobs are designed to run when the interactive jobs are not, and they're not designed to be safe to run when the interactive jobs are running, because what IRS clerk needs to input data at 2 AM in the morning?
The people who've coded the systems are long-since retired. The systems are known to work but nothing is known about whether they can support requirements which didn't exist in 1970, like 24/7 access. There exists no money in the budget for blackboxing them to determine whether they are in fact safe for Causes A National Calamity If We Make Any Mistakes concurrent usage. 24/7 access is not a hard requirement, for anyone in decisionmaking authority.
Thus: office hours for web apps which are fundamentally just a front-end into an interactive job.
COBOL isn't sexy, but the stuff it's powering is designed for reliability and stability. It's common in anything that needs to be rock solid; I came across it in the telecom industry, where it still powers billing systems.
There can be another reason why COBOL hasn't been replaced. No manager wants to be responsible if the new system has a problem/bug, especially if it was in a case where the old system worked fine.
The problem with pre-populated online forms is that if there are issues with the data that the tax authority receives from third parties, proving it wrong is difficult, and the burden of proof shifts to the taxpayer.
A few years ago, I resigned my job and I transferred my pension to what's called a Preservation Fund. In South Africa, you can get your pension paid out when you leave a job. Getting a pension paid out incurs tax, while transferring to a preservation fund is tax free.
However, the company that administered the pension fund screwed up, and issued a tax certificate that treated the pension transfer as a taxable payout, and submitted it to the South African Revenue Service (SARS). The pension administrators proved to be incompetent, and were incapable of fixing the issue.
After months of battling, I managed to get the issue sorted out, and I got a refund from the taxman, rather than the hefty payment that was initially assessed. Other colleagues who also left had less energy than me simply paid the tax caused by the pension company's administrative error. I'm sure there were hundreds of people around the country affected by the error, and most must have rolled over and paid.
I've read that one of the objections to having a pre-populated system in the US is that people are less likely to object if the forms are pre-filled. My experience would seem to confirm that view.
Norway has been on a pre-populated system for all tax returns for a few years now, and last year transitioned to "silent consent", i.e. if you don't register any changes before the deadline, it means you accept the prepopulated values. From the statistics I've seen, ~60% don't register any changes, while ~20% register additional information, ~10% correct errors and ~10% register both additional information and correct errors. A lot of the additional info and corrections is stuff like kindergarten expenses (which are tax exempt up to a limit of $3000/year) or donations to charities, since it's up to the kindergarten or charity to register these, and they often forget or get things wrong.
In the US system, the IRS still has all of that third-party data. If it's a significant amount of money, you'll just find out that something was wrong after you submit your tax return (when you get audited) rather than before.
I work at a think tank specializing in tax policy, and I've seen/heard all kinds of technical problems at the IRS. My favorite story I heard was about the "hip replacement gang". These are the IT guys who retire on Friday, and come back on Monday as consultants at twice their previous pay. They can't simply be left to retire, because nobody else knows how anything works.
We don't need ClearTax for the usual 'less than 5 minutes' return filing. The Indian Govt's website is pretty simple and easy to use (except if you are using it on the last working days of return-filing). Not to say, the Govt's site team are working on improving it further by aggregating tax related data and reducing data entry even further.
The following is for a freelancer and entrepreneur-
The Govt's site is complex for entrepreneurs (self-employed people) or small companies. And so is ClearTax (because of the complex rules). For that ClearTax has a blog that is pretty helpful in understanding the system and places your trust on them. But when I dived into the details ClearTax makes things sound so simple and increases your procedures and you end up paying unnecessary tax. Luckily when I started I had evaluated ClearTax and also liked it - its when I get into the details (the fine print of tax-laws) that my trust eroded off ClearTax.
ClearTax is also costlier than consulting a local practising CA (1.5 - 2x). However finding a good CA (or CA firm) and getting comfortable with them is a challenge. And it is worth pursuing the challenge. Even if I had to start again, I would consult a local CA. Also a good CA can help you save money and/or taxes (in legal ways). Apart from that I have heard that ClearTax has operational problems (like they miss out on filing returns when they are overloaded) - This last part is just from references and ClearTax might have solved it.
Note that the tax-laws for businesses in India are way complex and it is hard to understand those. Add to that the changes that occur every few years and the multiple tax authorities. The country rightly deserves the "difficult to do biz" tag. Many CAs err (or are just unsure) and you end up paying more tax than what was actually required. I would place ClearTax in that category.
Archit from ClearTax here. We are working very hard on creating a new product for freelancers and businesses.
Following is for the freelancer / business scenario:
We have to invent the interfaces, the design language, while making sure people can deal with tax concepts and pay appropriate tax. There are difficult concepts like depreciation which need careful handling.
Our freelancer / smb version of taxes will dramatically simplify life for self preparation.
Imagine an ITR-4S equivalent for freelancers which we are creating.
Note that a good CA can help you and come out ahead of software because of the complexity involved. But we hope to make software good enough for the services industry.
By the way, we are the makers of TaxCloudIndia.com which has 10K+ CA firms using our software. We have some of the largest CA firms using our tech. I believe a good CA can offer advisory today which software isn't able to yet.
I'm hoping to fix the "difficult to do" tag for Indian taxes with the efforts of the ClearTax team. That's our mission!
Addressing some common points in the thread: we work great for both simple and complex tax returns.
For simple tax returns: The huge improvement is zero data entry -- we'll automatically parse your Form-16 and fill out the correct tax form. We'll ask questions relevant to you. We automatically detect corner cases, mistakes, scenarios for notices and flag them for you.
We help in cases where you haven't claimed HRA, have interest income (and claim 80TTA deduction automatically for you!)
There's a lot of tax complications which self filers don't know and the Government software isn't informative and automated enough.
We end up saving taxes because our software does more. :)
It is great for us. Better APIs, more stability, clear wind behind our backs for a more digitization, more tax payers, more transparency, no middlemen, more things in white.
The Government software isn't very simple to use if you have switched jobs, have HRA to claim, or have more deductions than you have declared to the employer.
Many people miss out on deductions (such as 80TTA) which we automatically account for.
Plus we reduce data entry mistakes, and the other things I pointed out in the original comment.
The existing site is simple enough. Digital India would probably help these guys with Aadhaar auth, FACTA link for NRIs, and unified API.
The issue with IT website is not simplicity or functionality -- it is the fact that it assumes you know what you're doing. Which is simple for a nominal case, but gets increasingly complex with a diversified income sources and portfolios.
As an individual taxpayer, I would not pay to use ClearTax.
I have filed returns both on the Indian Government website and ClearTax. I do not see an added advantage with ClearTax, they show the same bunch of fields and as a last step, submit the data to the government website (I am not sure if the Government website crashes, how this will help ClearTax). I assume the only advantage is they can read your Name, addresses and gross salary data from the two page PDF you upload, not a big deal IMO.
As someone who has freelanced a bit, I would still not purchase their INR 5000+ plans. I have had CAs do it for 2500 or less. I assume the site is popular among first-timers or people who have not really tried the Income Tax website recently.
The desirability of paying to reduce pain and interactions with humans to get a job done increases proportional to income. I'm sure we all have been at a point in life (college) where we would read Indian tax code to try and avoid paying that 2500 as well. That changed, and it would continue to change for most people.
I would have other concerns, like privacy, but I doubt their pricing would come in my way. One less person to deal with is at least 3 hours of saved time.
The point I made with individual tax pay is there is no pain, so I would not pay. In case of freelancers, ClearTax does not reduce your effort, instead of your local CA, you just have to deal with someone sitting in another city.
Cleartax has done an amazing job, really. I filed my last two returns using Cleartax and everything went without a hitch. Even when the system fails to parse the Form-16 correctly it is easy enough to just manually enter the data, save it, come back to it later and complete filing the returns. I have had a harder time filing tax returns with TurboTax, though that was a while back. Cleartax kept sending me repeated email reminders to complete the filing process even after it was already complete, so there's a bug somewhere :) but otherwise kudos to Archit and the rest of the team.
Hell, I am ready to join their efforts, if only they would have a grumpy old guy like me on the team :)
I used to fill using the government site and I find it's UI terrible. Unless I know what I'm doing, I can easily screw up there. ClearTax makes it easy for a layman person to understand and use it.
1) You have a straight forward return (salary, interest, capital gains), the govt. website is good enough to file the tax. Cleartax is a tad bad friendlier.
2) You have a complicated scenario. Cleartax won't be a big help. Reason is that Indian tax laws lack clarity. They are written in a hard to understand lawyer speak that doesn't cover all the possible permutations. A local CA is a good option in this case, but also stop by the temple on your way back. Pray to god that tax tribunal is having a good day when assessing your "out of ordinary" return.
They seem like a waste of court time due to inadequate clarity in tax rules. Or maybe they were purposely written like this so that corrupt tax officials can harass citizens.
I am sure this was just a growing pain point, but I could not get any answers from them for about a week while filing my IT returns, just kept getting automated reminders. So I ended up going with Taxmantra, another e-tax filing provider and got it done within a day.
Preparing all the documents, receipts, the various numbers before filing the tax takes a long time, I can not imagine how you can do tax in 5 minutes even you have all the data ready, but anyway it's good news if we have one here at US.
I used clear tax myself last financial year, and it was a good experience, very simple to use. User experience is much better than other alternatives especially one provided by government.
problem is not filling the forms, 90% of the tax forms are submitted on the last week. Often the tax site will crash causing panic. Clear tax is storing and does retries which is the reason why many are using it
Meanwhile, ClearTax is really helpful if your returns are complicated. You have 3 houses, own stocks and a business etc. If you sign up for their gold package, a dedicated CA will assist you in all your returns and is available throughout the year over phone or email.