It's that time of the year in India to file personal Income tax. The deadline for AY 09-10 is 31st July. I have filed IT return 4 times till now -

  1. AY 06-07 - Local Tax Associates - Rs. 150

  2. AY 07-08 - Same - Rs. 200

  3. AY 08-09 - CA Referred by a friend - Rs. 150

  4. AY 09-10 - DIY - E-filing - FREE + Postage Cost Rs. 5 (Link)
Steps for DIY e-filing

  1. Register at Income Tax India E-Filing. (Link)

  2. Download relevant Excel sheet to fill the return

  3. Copy-Paste data from your Form 16

  4. Look at your Bank Statements, FD's and NSC interests. Fill in column 2(b).

  5. Calculate the Tax

  6. If you have to pay additional tax then go to this link. See the e-payment procedure and head towards 'Pay Taxes Online' link. Do online payment, and collect your challan number which is to be quoted in IT Return. Simple.

  7. Re-Check the Excel sheet.

  8. Generate XML

  9. Submit the file through your registered account. You'll receive the ITR-V acknowledgement

  10. Mail the acknowledgement with your signature to local IT office within 30 days.

  11. Done. They will email you a scanned document of stamped acknowledgement soon.
Steps for e-filing via 3rd party

  1. Register at some XYZ third party web-site

  2. File few web-forms

  3. Upload Form 16 and Investment details

  4. Pay the fees - Typically Rs. 150

  5. They send you the Form V.

  6. Mail the form to IT office.
Steps for hard-copy filing via an agent, IT Lawyer or CA

  1. Go to the agent with PAN photocopy and Form 16

  2. Fill a simple form

  3. Go back to collect your acknowledgement form

  4. This usually costs from Rs. 150-250 for basic plan.
Steps for traditional filing

  1. Print the relevant form (ITR-1, 2, 3, 4 etc)

  2. Fill it

  3. Go to IT Office. Stand in the queue. Submit it and take acknowledgement.
I would recommend to file the e-returns directly. The biggest gap is the requirement of ~$85 Microsoft Excel to fill the form. That's a deal breaker for many. For avoiding the grey area of pirated software, one may use the 60 day trial version. File taxes and un-install.

Chart: Absolute percentage tax paid by me in last 4 years.
It’d be nice if someone replicates ITR-1/2 spreadsheet on Zoho or Google Online Docs. The responsibility lies with IT-department to continue to pull down barriers in filing taxes.