How to e-Verify ITR (Income Tax Returns) Using a Demat Account?

Filing your Income Tax Returns (ITR) doesn't just end with submission of the form. It must also be e-verified within 30 days of filing. Failure to do so will make your ITR invalid, even if you file it before the due date. You can use your Demat account to complete the verification process. It is quick and secure.

This article explains how taxpayers can e-verify ITR using a Demat account and how to pre-validate a Demat account before starting the verification process.

Key Takeaways

• Taxpayers need to verify their I-T returns within 30 days of filing.
• You can use your Demat account to securely e-verify ITR.
• Pre-validate the Demat account before using it for ITR verification.
• An Electronic Verification Code (EVC) sent to the taxpayer during the process of e-verification has to be entered in the Income Tax Department’s portal to complete the verification of I-T returns.
• Revalidate your Demat account if your account details change.

What is e-Verification of ITR?

e-Verification is the process of electronically verifying the Income Tax Returns after it has been filed. It is a mandatory step to complete the ITR process.

Prerequisites for e-Verifying ITR Using Demat Account

Taxpayers must meet the following conditions if they want to use their Demat account for ITR verification:

• Be registered on the Income Tax Department’s portal.
• Must have already filed their ITR.
• Have an active Demat account with either the National Securities Depository Limited (NSDL) or the Central Depository Services Limited (CDSL).
• Trade in stocks, mutual funds or other securities.
• A valid mobile number/email ID is linked with the Demat account to get an OTP (One Time Password) during e-verification.

Note: The Demat account must be pre-validated before the ITR can be verified.

How to Pre-validate Demat Account?

Taxpayers must visit the website of the Income Tax Department to start the pre-validation process.

Step 1: Go to www.incometax.gov.in and log in using PAN and password.

Step 2: Select the option for Demat Account in ‘my profile’ section.

Step 3: Enter the depository participant and choose from the two options provided: NSDL or CDSL.

Step 4: Ensure that mobile number and email on the profile match the details registered with the taxpayer’s broker/DP.

Step 5: Enter details, such as Client ID, and click on the pre-validate option.

Step 6: Taxpayers will receive a message saying that their Demat account has been pre-validated.

Note: Once the account has been pre-validated, it will appear on the Income Tax portal under the Added Demat account tab. The status will be shown as Validated and EVC enabled. The pre-validation process must be done only once. It will apply to all future tax filings. If the Demat account details change, the account must be revalidated.

How to fix Demat Pre-Validation Failures?

If your Demat account pre-validation fails, the tax portal displays the cause under the ‘Added Demat Accounts’ section. Refer to this matrix for corrective actions: 

Failure Reason	Technical Cause	Resolution Action
Name Mismatch	Spelling on PAN different from DP records.	You can send name correction request to stockbroker/DP to match your PAN card exactly.
Contact Detail Mismatch	Mobile number, email ID does not match DP profile.	Update contact details in your e-Filing profile or submit a detailed update request to your stockbroker.
PAN Unlinked At Depository	The account is not linked to your PAN with NSDL/CDSL.	Submit a PAN linkage request along with a self-attested PAN copy to your DP.
EVC Already Enabled Elsewhere	EVC functionality is active on another Demat or Bank account.	Navigate to ‘My Profile’ then ‘My Bank/Demat Account’ and disable EVC on the existing active account first.
Secondary Holder Restriction	PAN belongs to a secondary holder in a joint account.	Use the primary holder's PAN for validation or choose Aadhaar OTP/ net banking for the secondary holder.

How to e-Verify Income Tax Returns Using Demat Account?

e-Verifying ITR using a Demat account is simple. Here are the steps:

Step 1: Visit www.incometax.gov.in website of the Income Tax Department.

Step 2: Log into the account and select the option of ‘View Income Tax Returns.’

Step 3: A new screen will appear. Choose the option that says, “Click here to view the I-T returns pending for e-verification.”

Step 4: Select the option to generate EVC via Demat account number to e-Verify the Income Tax Returns.

Step 5: An Electronic Verification Code (EVC) will be sent to the taxpayer’s registered mobile number. Enter the EVC number and press submit.

Step 6: The taxpayer will receive a message that their ITR has been e-verified. The acknowledgement will also be sent to their registered e-mail address.

Pre-login Method for e-Verifying Income Tax Returns

A pre-login method allows taxpayers to verify their ITR without logging into the Income Tax e-Filing website.

Step 1: Choose ‘e-Verify Returns’ on the homepage of the Income Tax Department’s portal.

Step 2: Enter PAN, mobile number, acknowledgement number, and assessment year.

Step 3: Enter the six-digit OTP sent to the registered mobile number. Choose EVC through Demat account and follow the instructions given on the screen.

What Happens if 30 Days of e-Verifying ITR is Missed?

The Income Tax Returns may be treated as invalid, meaning it is considered as though it was never filed. This can delay your refund and may also lead to late filing consequences, such as penalties or interest, if applicable.

1. Invalid I-T returns status: The Income Tax Department treats the submitted I-T returns as invalid.
2. Revised filing date: If a delay request is approved later, the date of e-Verification becomes the official filing date (not the original submission date).
3. Statutory penalties under Section 234F: If the updated filing date falls past the statutory deadline (July 31 for non-audit cases), taxpayers face late filing fees up to ₹10,000.
4. Interest charges under Section 234A: Taxpayers with outstanding tax liabilities incur penal interest at 1% per month (or part of a month) calculated from the original due date.
5. Refund withholding: The tax department will not process or issue any tax refunds until verification is complete.

Step-by-Step Condonation of Delay Workflow

If you missed the 30-day window due to genuine hardship, follow these steps to request a delay condonation:

Step 1: Log in to www.incometax.gov.in.

Step 2: Go to ‘Services’ in the top navigation bar and select ‘Condonation Request.’

Step 3: Select ‘Condonation of Delay in submitting ITR-V/e-Verification’ and click continue.

Step 4: Select your unverified I-T returns and choose the reason for delay from the dropdown menu.

Step 5: Upload supporting documents.

Step 6: e-Verify following approval.

Once the jurisdictional Income Tax Officer approves your condonation request, the portal reactivates to the e-Verify link. Complete verification using your Demat account EVC immediately.