Filing income-tax returns using Aadhaar

Digital ID is used for electronic verification of income tax returns, which enables instant validation without the need for physical document submission. The Income Tax Department, in collaboration with the Unique Identification Authority of India (UIDAI), allows taxpayers to e-verify their filed income tax returns (ITRs) through Aadhaar-based one-time password (OTP) authentication.

Taxpayers must verify their return within 30 days of filing an ITR through the Income Tax e-filing portal for it to be considered valid. Aadhaar-based e-verification has become the most popular verification method, which allows taxpayers to instantly verify their returns by receiving an OTP on their Aadhaar-registered mobile number and entering it on the e-filing portal.

For the assessment year 2024-25 (till 31st July 2024), more than 62.1 million ITRs were e-verified, of which more than 58.1 million used Aadhaar-based OTP, which represents 93.6% of all e-verified returns. This method has largely replaced older verification processes. These methods include submission of a physically signed income tax return verification form (ITR-V) by post to the Centralized Processing Center (CPC) in Bengaluru, net banking verification, bank ATM verification, and Demat account verification.

The Aadhaar-based e-verification system has enhanced tax compliance in India by providing instant return verification without requiring taxpayers to print, sign, and mail physical documents. It reduces the ITR processing time from weeks to days, eliminating verification delays that previously led to delayed refunds.

The system ensures secure authentication through government-verified biometric identity, which lowers compliance costs for taxpayers and administrative costs for the Income Tax Department. This system also supports India’s digital tax administration transformation under the Digital India initiative.