Journal of Internet Banking and Commerce ISSN: 1204-5357
ISSN: 1204-5357
+44-175-271-2024SHAMIKA KUMAR
Assistant Professor, School of Business, Lovely Professional University, Phagwara, Punjab, India
SHIKHAR GUPTA
School of Business, Lovely Professional University, Phagwara, Punjab, India
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E-filing is the powerful tool that can deliver significant social and economic benefits. It can provide a strong support to the government for good governance and large population to pay their liabilities to the government effectively. Present study is an empirical study about the income tax payer’s perceptions toward electronic filing. The study is based on primary data collection with the help of structured questionnaire being filled by 262 tax payers which were purposively and conveniently chosen by individuals, business firms and HUF. Descriptive statistics and factor analysis had been used to analyses the awareness, satisfaction level and the problems of the respondents. The results suggested that although E-filing has given ease of use to the income tax payers yet they are facing various problems like peak rush, difficulties in operations in this process.
E-filing; Awareness; Perceptions; Satisfaction; Problems
Income tax department is one of the important departments of Ministry of Finance, Government of India. This department has come into existence in 1860. The department followed this act only for five years and, the second act came in force in 1865. There were major changes in this act as compared to the first act. With this act the income tax department started working with a new concept of agriculture income. However the original story of income tax came into existence in 1922 with the implementation of income tax act 1922. It showed the major changes from the last act by imposing the charges in the year of assessment on the income of last year. After this, in 1956 the government revised this act with few changes keeping the original in its format. For its review, a committee was formed by the government. This committee made few changes and submitted the income tax bill in Lok Sabha during April 1961. The president accepted this bill on 13th September, 1961. Since 1961, Government has been using this act for running Indian taxation system. The system identified few important facts that tax payment decreases when tax saving investment increases along with the income and employees preferred to invest in life insurance corporation, provident fund and national saving certificate.
In 2014, income tax department has established a system for centralized process of returns and one prominent type is the introduction of electronic filing system for income tax payers. A system was desired that would make the process of filing of income tax returns (ITR) easier for taxpayers and as well as reduce the time required for data entry at tier end of receipt of income tax returns (ITR). Electronic filing is a new and effective method of filing income tax returns online and has electronic taxes. The major advantage of electronic filing includes the ease of use, technology, reduction in rush and saves the time. After using an electronic service over the internet, the public may find that the electronic service system is easy and useful.
Why there was an evolution of E-filing system existed? In this era the modern people use the exclusive technology then the government of India make some possible facts towards electronic filing, that the taxpayers have been submitted their tax returns online with the help of the website i.e., http://incometaxindiaefiling.gov.in/. Electronic filing comes with many benefits like Income Tax Payer can file their online return anytime in day or night. Certainty of delivery and quick confirmation provides immediate confirmation from tax administration that returns have been received. Tax payer receiving refunds to get them sooner, privacy and security is assured by government of India. Different drawback related like chance of data entry errors however in online the transaction can be done electronically with a click of button. Here accessibility is allowed 24*7*365. The handling and storing of data and documents is easy. It is the fastest way to file electronic returns and helps to proceed quickly; even the due date to file is over. Paper returns take approximately four to six weeks to process. If the filing of returns is done electronically and choose direct deposit of your refund, the fund will transfer directly in the bank account within few days. It is free for the income tax payers who are willing to file the returns. It is a secured process that is using the private network designed to meet the highest security standards.
Electronic filing is the process of submitting tax returns over the internet, using tax preparation software that has been pre-approved by relevant tax authority that means the income tax imposed on the individual or entities (taxpayers) that varies with the income or profit (taxable income) of the taxpayers.
Surprisingly, literature an E-filing in India is scanty. Keeping this in wind, the present study aimed to find the income taxpayers perception towards electronic filing among individual, business firms and HUFs. The study is being conducted with primary data. Observations are being observed by questionnaire to find out the income tax payers perception, satisfaction and awareness of electronic filing.
Following objectives are planned in the present investigation
1. To know about the perception of income taxpayers towards electronic filing.
2. To know about the income taxpayers problems towards electronic filing.
3. To understand about the satisfaction level and risk of the income taxpayers toward electronic filing.
4. To know about the awareness level of taxpayer.
Wang [1] in his study discussed about adoption of electronic tax filing systems. This paper discusses the factors affecting the adoption of electronic tax-filing systems. Using the technology acceptance model (TAM) as a theoretical framework, the study introduced “perceived credibility” as a new factor that reflects the user’s intrinsic belief in the electronic tax-filing systems. The findings of the study provided important implications for developing effective electronic government services in general and effective electronic tax-filing systems in particular.
Lalonde [2] analyzed the feasibility of implementing electronic filing for case documents filed in North American Free Trade Agreement NAFTA. The purpose of the paper was to initiate the thought process and discussions among the three national sections of the NAFTA Secretariat and their respective government by outlining the issues and requirements pertaining to the implementation of electronic filing, and recommending a potential direction for the future.
Ambali [3] in their study discussed the e-government policy that has been imposed and the ground issues involved in e-filing system. A survey of questionnaire was distributed to participants and supported by unstructured interview for an in-depth investigation about the perceived ease, usefulness, security, facilitating conditions and retention for e-filing system. A sample size of 450 taxpayers was purposively and conveniently chosen to participate in the study over a period of two months of data collection.
Azmi et al. [4] in their study explained about the taxpayer’s response who accepted the e-filing system. The e-filing system is an important e-government service in Malaysia. The study proposed a model consisting of three constructs, which was perceived usefulness, perceived ease of use and perceived risk. The sample size is 200 respondents. Questionnaires were distributed through emails. The survey instrument was based on 7-point likert scale questionnaire.
Lu et al. [5] conducted an empirical theory of on-line tax filing acceptance model. This model would be the reference for establishing e-government. The study also considered tax equity and norms factors. The study focused on the behavioral control, attitude and subjective norms are the determinants affecting behavioral intention (on-line tax filing intention) and Online tax filing intention affects on-line filing actual behavior and significant positive effect on on-line tax filing behavior control.
Geetha et al. [6] in their study focused about the perceptions of e-filing of income tax return. To assess the tax payer’s perception, awareness towards e-filing of income tax returns, the study used a questionnaire of 200 respondents to find out the result.
Meenal et al. [7] conducted a study and focused that objective of taxpayers behind e-Filing, e-Governance, e-Return intermediaries, ITR, Security. Easy to use and time saving is the responsible factor.
Mamta [8] explained that the felt it easy to use e-filing system. To investigate whether the tax payers had encountered any problems/ (or facilities) in using the e-filing system. To analyze the situation, 300 respondents and their result were recorded. It can be concluded that majority of the tax payers have own enough facility to use e-Filing system at home or at the workplace and ease of use is the most important reason to file returns online.
Arora [9] analyzed about the process of electronic filing used in India and the progress of e-taxation system in India by comparing its yearly progress on the basis of income tax returns. The data source was secondary in nature and Descriptive statistics had been used for the study. The study proved that e-taxation had shown some dynamic result will change in the Indian Tax system.
Chawla et al. [10] conducted a study to check the satisfaction level and awareness of the tax payers toward e-filing of income tax returns. 300 filled questionnaires from respondents (162 male and 138 females) were used to analyze the results by using mean score for ranking by using a Likert scale of 5, ANOVA and chi-square test through SPSS was also used.
Kumar et al. [11] discussed about the benefits of electronic filing of tax to the authorities, policy makers, present and prospective tax payers, e-filing intermediaries, financial software engineers and academicians. The paper focused on the benefits derived by the different sections of the society due to e-filing of income tax returns.
Rajeswari et al. [12] checked the awareness and satisfaction level of e tax filing of salaried employees. An analysis has been made towards the technical and managerial constraint of e-filing pattern.
Ling et al. [13] determined the influence of e-participation on e-filing and also studied of the citizen adoption on e-government services. A set of questionnaire survey was designed and piloted before the actual set was utilized to collect data and information that could be analyzed to test the above hypotheses. The study concluded that technology readiness i.e. main reason behind the adoption of e-filing system.
Lambertony et al. [14] determined that taxpayer preferences increases tax compliance. Basically the paper was focused about the benefits of e-filing and discussed about tax compliances. Taxpayer’s agency may transform the tax payment process with the help of the government.
Ragupathi et al. [15] studied the overall experience and awareness level of tax payers towards e-filing. Descriptive research method had been used in the present study to analyze the data.
Verma et al. [16] discussed about the trends emerging in e-filing. E-filing statistics and information from some of the top rated countries had been collected to show the trend. Data was compared with some of the countries rated quite high in e-filing of tax returns. The study was based on secondary data and information.
Castro et al. [17] in their study aimed to determine the level of awareness in online filing and tax payment as the basis for efficient and on-time transactions of small and medium sized enterprise owners in Batangas city (Philippines). The descriptive design exercising a survey questionnaire to appoint the profile of the respondents. The paper focused of perceived ease of use, usefulness and reduces the riskiness of the system to increase adoption of the e-Service.
Gayathri et al. [18] explained the tax payer’s perception towards e-filing of income tax returns. To measure the level of satisfaction and awareness of the respondents towards e-filing, primary data was collected with the help of questionnaires. The study conclude the respondents did e-filing due to faster tax refund, 4 percent of respondents did e-filing for special cash rebate and only 7 percent of respondents had said that they were having no motivation for e-filing, rather the reason was forced mental pressure.
Pantow et al. [19] in their study aimed to analyze the impact of the perceived usefulness, ease of use, subjective norms and attitudes towards the taxpayer's intention to use e-filing system. In their study, primary data had been used to obtain the responses with the help of questionnaire.
Azmi et al. [20] discussed about rapid adoption of tax, e-filing in many countries and argued that an integrated system which should be reliable. Especially in developing countries like Malaysia due to high perceived risk by the public should be made. The paper was majorly focused as the perceived risks involved in the e-tax filing. This paper aimed to analyze the perceptions, awareness level, satisfaction level and problems faced by income tax payers due electronic filing.
The present research study is based on the income tax payer’s perception, satisfaction and awareness towards electronic filing. The study was based on the 262 respondents which was including HUF, individuals and business firm (proprietor and partnership) chosen purposively and conveniently. The study is accomplished with the help of structured questionnaire circulated among the income taxpayers who are filing the income tax returns (ITR) through internet. The study was carried out by using primary data which is collected with the help of the structured questionnaire and the method of the data collection was personal interview.
Research Instrument for the Study
In order to measure the response from the respondents, structured questionnaire is used. The data collected from the respondents is recorded in SPSS. Descriptive statistics and factor analysis had been used in order to fulfill the different objective of the study.
Demographic Profile of the Respondents
The following tables describe the demographic picture of the respondents. In the present study (Table 1).
Table 1: Demographic profile.
| Variables | No of respondents | Percentage |
|---|---|---|
| i) Gender | ||
| Male | 163 | 62.2 |
| Female | 89 | 34 |
| Other (HUF, firm and company) | 10 | 3.8 |
| ii) Status | ||
| Individual | 248 | 94.7 |
| HUF | 5 | 1.9 |
| Firm | 6 | 2.3 |
| Company | 3 | 1.1 |
| iii) Level of education | ||
| Graduate | 170 | 64.9 |
| Postgraduate | 92 | 35.1 |
| iv) Age | ||
| Less than 20 | 13 | 5 |
| 20-30 years | 60 | 22.9 |
| 30-60 years | 187 | 71.4 |
| More than 60 years | 2 | 0.8 |
| v) Annual income | ||
| 2-5 lakh | 51 | 19.5 |
| 5-10 lakh | 146 | 55.7 |
| More than 10 lakh | 65 | 24.8 |
Source: Author’s calculation
The above Table 1 shows the different demographic profile of respondents that about the total number of male and female are in survey. In the study the males are 62.2 percent and females are 34.0 percent and the missing value describes the companies, HUF and firms these are 3.8 percent, most of the respondents are individual and education is the important factor that help for filing the returns online. There were two types of respondents graduate and post graduate (Table 2). Most of the people who are filing income tax returns are generally belong to middle class income between 5-10 lakh. The classification of annual income is done on the basis of income tax act (1961) as per latest slab in 2016-2017.
Table 2: Awareness/Usefulness of e-filling.
| Frequency | Frequency | |
|---|---|---|
| i) Reason behind the filing of returns | ||
| Regulation provision | 4 | 1.5 |
| Refund claim | 123 | 46.9 |
| Notice from income tax department | 3 | 1.1 |
| To paid income tax | 132 | 50.4 |
| ii) Source of awareness | ||
| Newspaper | 1 | 0.4 |
| Internet | 39 | 14.9 |
| Friends | 1 | 0.4 |
| Tax consultant | 221 | 84.4 |
Source: Author’s calculation
The above Table 2 shows the awareness of the respondents towards electronic filing and its usefulness in current scenario. The study concluded that although, maximum respondents are educated but they do tax filing with the help of the tax consultant (Table 3).
Table 3: Descriptive statistics.
| Descriptive Statistics | |||
|---|---|---|---|
| Factors | N | Mean | St d. Deviation |
| Awareness of E-filing | 262 | 4.12 | 0.423 |
| Satisfaction of Problems of E-filing | 262 | 4.14 | 0.557 |
| Safety of E-filing | 262 | 4.25 | 1.921 |
| Facility provide by E-filing | 262 | 4.21 | 0.643 |
| Payment procedure | 262 | 4.25 | 0.640 |
| Satisfy with the electronic payments procedure | 262 | 4.26 | 0.686 |
| Level of satisfaction | 262 | 4.19 | 0.658 |
| Do you trust e-filing | 262 | 4.22 | 0.715 |
| I do not have explanation use e-filing, I feel nervous | 262 | 3.48 | 1.179 |
| Network problem during peak hours | 262 | 3.25 | 1.04 |
| Difficult to remember reg.no password | 262 | 3.10 | 1.07 |
| Computer illiterate and so to depend other | 262 | 3.07 | 1.137 |
| Website of income tax dept. to be made user friendly | 262 | 3.91 | .635 |
Source: Author’s calculation
The Table revealed the people are aware about the electronic filing and perceived ease of use leads to satisfaction, perceived risk and problem faced by income tax payers.
Factor Analysis
In order to have more concise result factor analysis had been used. KMO value of 0.738 suggested that the factors extracted a substantial amount of variance and one significant (Tables 4 and 5).
Table 4: KMO and Bartlett's Test.
| Kaiser-Meyer-Olkin Measure of Sampling Adequacy | 0.738 | |
|---|---|---|
| Bartlett's Test of Sphericity | Approx. Chi-Square | 963.030 |
| Df | 78 | |
| Sig. | 0.000 | |
Table 5: Communalities.
| Initial | Extraction | |
|---|---|---|
| Awareness of Efiling | 1.000 | 0.692 |
| Satisfaction in Efiling | 1.000 | 0.690 |
| Safety of Efiling | 1.000 | 0.509 |
| Facility provide by Efiling | 1.000 | 0.502 |
| Payment procedure | 1.000 | 0.623 |
| Satisfaction in terms of electronic payments procedure | 1.000 | 0.629 |
| Level of satisfaction | 1.000 | 0.673 |
| Trust in Efiling | 1.000 | 0.579 |
| Use of technology leads to satisfaction | 1.000 | 0.705 |
| Problem during peak hours | 1.000 | 0.620 |
| Difficult to remember reg.no password | 1.000 | 0.740 |
| Computer illiterate and so to depend other | 1.000 | 0.664 |
| Website of income tax dept. to be made user friendly | 1.000 | 0.587 |
Extraction Method: Principal Component Analysis
Principal components method was used to find the initial solution which is the most commonly used method. Eigen value criteria and the screen plot method were used for the confirmation of the initial solution, which suggests that four factors had an Eigen value greater than 1 and the factor pattern is consistent across the sample, which was easy to interpret since the items loaded heavily on single factor.
The Eigen value of the first factor is 3.204 and it explains 24.646 percent variance. The second factors had an Eigen value of 2.407 and it explains 18.513 percent of the variance. The third factors have an Eigen value of 1.548 and it explains 11.908 percent of the variance. The fourth factor has an Eigen value of 1.054 and it explains 8.109 percent of variance. Together, the four factors explain 63.175 percent of the total variance (Tables 6-9).
Table 6: Total Variance Explained.
| Component | Initial Eigen values | Extraction Sums of Squared Loadings | Rotation Sums of Squared Loadings | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Total | % of Variance | Cumulative % | Total | % of Variance | Cumulative % | Total | % of Variance | Cumulative % | |
| 1 | 3.204 | 24.646 | 24.646 | 3.204 | 24.646 | 24.646 | 2.996 | 23.047 | 23.047 |
| 2 | 2.407 | 18.513 | 43.159 | 2.407 | 18.513 | 43.159 | 2.405 | 18.500 | 41.547 |
| 3 | 1.548 | 11.908 | 55.067 | 1.548 | 11.908 | 55.067 | 1.611 | 12.396 | 53.942 |
| 4 | 1.054 | 8.109 | 63.175 | 1.054 | 8.109 | 63.175 | 1.200 | 9.233 | 63.175 |
| 5 | 0.896 | 6.889 | 70.064 | ||||||
| 6 | 0.813 | 6.251 | 76.315 | ||||||
| 7 | 0.668 | 5.140 | 81.455 | ||||||
| 8 | 0.543 | 4.174 | 85.628 | ||||||
| 9 | 0.451 | 3.471 | 89.099 | ||||||
| 10 | 0.387 | 2.978 | 92.077 | ||||||
| 11 | 0.382 | 2.937 | 95.015 | ||||||
| 12 | 0.342 | 2.628 | 97.642 | ||||||
| 13 | 0.306 | 2.358 | 100.000 | ||||||
Extraction Method: Principal Component Analysis.
Table 7: Component Matrixa.
| Component | ||||
|---|---|---|---|---|
| 1 | 2 | 3 | 4 | |
| Awareness of E-filing | 0.351 | -0.140 | 0.551 | -0.496 |
| Satisfaction of Problems of E-filing | 0.464 | -0.083 | 0.655 | -0.197 |
| Safety of E-filing | 0.256 | 0.028 | 0.279 | 0.605 |
| Facility provide by E-filing | 0.678 | 0.115 | 0.169 | 0.019 |
| Payment procedure | 0.757 | 0.188 | -0.087 | 0.089 |
| Satisfy with the electronic payments procedure | 0.750 | 0.185 | -0.136 | 0.115 |
| Level of satisfaction | 0.752 | 0.211 | -0.242 | 0.065 |
| Do you trust E-filing | 0.667 | 0.207 | -0.280 | -0.114 |
| I do not have explanation use E-filing I feel nervous | -0.057 | 0.802 | -0.212 | -0.114 |
| Network problem during peak hours | -0.142 | 0.638 | 0.424 | -0.112 |
| Difficult to remember reg no password | -0.297 | 0.765 | 0.244 | -0.085 |
| Computer illiterate and so to depend other | -0.276 | 0.757 | -0.060 | 0.107 |
| Website of income tax dept. to be made user friendly | -0.085 | 0.025 | 0.508 | 0.567 |
aExtraction Method: Principal Component Analysis.
Table 8: Component Transformation Matrix.
| Component | 1 | 2 | 3 | 4 |
|---|---|---|---|---|
| 1 | 0.915 | -0.225 | 0.328 | 0.071 |
| 2 | 0.279 | 0.952 | -0.126 | 0.007 |
| 3 | -0.278 | 0.182 | 0.785 | 0.523 |
| 4 | 0.092 | -0.101 | -0.510 | 0.849 |
Extraction Method: Principal Component Analysis.
Rotation Method: Varimax with Kaiser Normalization.
Table 9: Rotated Component Matrixa.
| Component | ||||
|---|---|---|---|---|
| 1 | 2 | 3 | 4 | |
| Awareness of E-filing | 0.083 | -0.062 | 0.818 | -0.109 |
| Satisfaction of Problems of E-filing | 0.202 | -0.045 | 0.777 | 0.208 |
| Safety of E-filing | 0.22 | -0.041 | -0.009 | 0.678 |
| Facility provide by E-filing | 0.607 | -0.014 | 0.331 | 0.154 |
| Payment procedure | 0.777 | -0.016 | 0.111 | 0.086 |
| Satisfy with the electronic payments procedure | 0.786 | 0.786 | 0.057 | 0.082 |
| Level of satisfaction | 0.82 | -0.019 | -0.003 | -0.016 |
| Do you trust E-filing | 0.735 | 0.007 | 0.031 | -0.195 |
| I do not have explanation use E-filing I feel nervous | 0.22 | 0.75 | -0.228 | -0.206 |
| Network problem during peak hours | -0.079 | 0.728 | 0.263 | 0.121 |
| Difficult to remember reg.no password | -0.134 | 0.848 | 0.041 | 0.04 |
| Computer illiterate and so to depend other | -0.014 | 0.761 | -0.288 | 0.045 |
| Website of income tax dept. to be made user friendly | -0.159 | 0.078 | 0.079 | 0.741 |
Extraction Method: Principal Component Analysis.
Rotation Method: Varimax with Kaiser Normalizationa
Rotation converged in 5 iterations.
In the component matrix some of items load on more than one factor, making interpretation of the factor ambiguous. It shows that the correlation of each variable with the each factors (Table 10). The rotated component matrix is presented in the Table 9.
Table 10: Final Solution Using Factor Analysis.
| Statements | Component | |||
|---|---|---|---|---|
| Satisfaction | Safety | Experience in terms of E filing | Experience in terms of E filing | |
| Awareness of E-filing | 0.818 | |||
| Satisfaction of Problems of E-filing | 0.777 | |||
| Safety of E-filing | 0.678 | |||
| Facility provide by E-filing | 0.607 | |||
| Payment procedure | 0.777 | |||
| Satisfy with the electronic payments procedure | 0.786 | |||
| Level of satisfaction | 0.82 | |||
| Do you trust e-filing | 0.735 | |||
| I do not have explanation use e-filing I feel nervous | 0.75 | |||
| Network problem during peak hours | 0.728 | |||
| Difficult to remember reg.no password | 0.848 | |||
| Computer illiterate and so to depend other | 0.761 | |||
| Website of income tax dept. to be made user friendly | 0.741 | |||
The result of the factor analysis (Table 10) revealed that factors affected the perception of income tax payers towards electronic filing i.e. satisfaction, risk involved, safety, usefulness and problems.
Satisfaction reflects that the income tax payers are satisfied with electronic filing and are aware to the website or its uses. The safety or perceived risk described that user feel safe while filling their returns. The income tax payers find the some difficulty in network problems in peak months and also have problems in remember to learn reg no and password.
The result of the factor analysis (Table 10) revealed that factors affected the perception of income tax payers towards electronic filing i.e. satisfaction, risk involved, safety, usefulness and problems.
Satisfaction reflects that the income tax payers are satisfied with electronic filing and are aware to the website or its uses. The safety or perceived risk described that user feel safe while filling their returns. The income tax payers find the some difficulty in network problems in peak months and also have problems in remember to learn reg no and password.
As per the finding of the research study, here are some of the suggestions the research would like to make:
1. According to this survey that the income taxpayers demands the website more eco-friendly that means when the taxpayers operates the website then the websites gives the steps for filing the returns if these changes develop then the income taxpayers don’t depend on others for electronic filing.
2. Government also focus about the income tax payers expectations that what problems occurs for filing the returns online that will help to the income tax payers for filing the income tax returns.
3. For the betterment of the website the government must focus on the website server that the website properly work in the peak months and make sure to use more and more advance technology for make easy website for the income taxpayers for filing the income tax returns.
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