Indian Govt. has launched this website where they provide an XLS sheet which can be easily filled using the Form 16 by the users which will generate an XML file and the return can be filed online by uploading the XML with immediate acknowledgment receipt which the user can print and keep it forfuture reference.
Ref: incometaxindiaefiling.gov.in/portal/index.jsp#You will have to register yourself on the website using your pan number and then upload the XML file generated from this sheet.
Most of the info in the XLS is available in our Form 16.
In addition to that they have even provided a document to implement bulk upload of Tax Returns, this can help companies who can use the Web services exposed by them for E-Tax Filing. here is the link for all the documentation and the schemas / web services etc.
Schema : incometaxindiaefiling.gov.in/portal/downloads08-09/ProdRelease1.1.zip
Web Services User Manual : incometaxindiaefiling.gov.in/portal/downloads/DIT_WS_User_Manual_1.02.zip
Last but not the Least this is Free of charge, and some companies have started to use the Web Services to file the Tax Returns directly for their employees.
You can buy digital signature from many companies authorized to do so (google it).you will need a "class 2 (individual)" digital signature. Prices are mostly around 500 to 1000 rupees for one year. Without digital signature, you can efile the return but will have to submit a printed reciept to ITO within 15 days of efile.taxspanner.com which charges 750 rupees for e-filing for 3 years and also provides a digital signature from MTNL valid for three years.
Their interface is also better than taxsmile.com and taxshax.com (two other e-filing sites I looked at). Both these companies provide similar deals. Speak to TaxSpanner.com over the phone, get promotional code. If you use promotion code then you only pay less for filing for one year. I think this is much cheaper.
Note : This is not a legal/professional advise, it just a personal opinion. Use information at your own risk.