TDS IS LIABLE TO BE PAID ONLINE OR NOT?

RAJAN GUPTA , Last updated: 13 April 2008
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Dear friends,

As you may know that E-PAYMENT OF TAXES has been madeMANDATORY FROM 1.04.08 for certain category of tax payers i.e

1.All Corporates.

2.person other than corporate but covered under section 44ab(compulsory Tax audit)

The e-payment means pay the taxes through net facility /internet/net banking or Credit or Debit card .Payment Facility to taxes through credit and debit card is yet to be finalised by the banks though allowed by income tax deptt. /CBDT in his circular/rules.

Now RBI has come up with a circular to implement the scheme and instruct the banks "not to receive payment from the corporate assesse in physical challan at all".In circular its is strongly written in bold letters that"Assesses who's pan's 4th digit is "C" can not deposit tax in to bank branches manually,Physical challans from such assesses shall not be accepted across the counter.

Moreover in circular RBI has instructed the banks that in case of person covered under section 44AB and required to deposit tax online ,there is no indication in pan itself ,so in this case taxpayers words will be final.

so friends after this circular corporate assesses has no option left to deposit tax otherwise than e-payment.

but this circular has raised a question once again .

Whether tds should also be deposited online compulsorily ????

It is hotly debated whether TDS is also a tax and to be deposited mandatory online by such assessee,

In rules issued by the CBDT taxes means taxes as explained in section 2(43) ,
further instruction issued on website by income tax deptt "how to pay tax online"(link given at the bottom)define e-payment of taxes as under.
"All Direct Taxes e.g. Income Tax, Corporate tax, FBT, BCTT (TDS, Advance tax, self assessment tax) to be paid online using net banking facility"
But what RBI circular says that forth digit of the pan of the corporate assesse is "C" and banks should not receive physical challan from such assessee .
But TDS(tax deducted at source) is deposited against a TAN ,and TAN has no indication whether it is of the corporate assesse or otherwise.so what we may conclude from RBI circular
- that RBI thinks that TDS is not covered under the compulsorily online payment of taxes.
- that RBI has just missed to mention about Tan.

I am not concluding any thing here legally but as I am strong supporter of online payment of taxes I may conclude here that all taxes should be deposited online due to benefit attached with online payments .

please comment after reading the following circular.

Mandatory electronic payment of tax by certain Categories of taxpayers w.e.f. 1-4-2008

CIRCULAR NO. DGBA.GAD. NO. H. 10875 / 42.01.038 /2007-08, DATED 10-4-2008

As you are aware, the Central Board of Direct Taxes vide their Notification No. 34/2008 dated 13-3-2008 (copy enclosed) have made electronic payment of taxes mandatory for the following categories of tax payers w.e.f. 1-4-2008 :

a. A company

b. A person (other than a company), to whom provisions of section 44AB are applicable.

2. In this regard the following instructions may be kept in mind while implementing the Government Notification:

(i) the status of all corporate taxpayers can be identified from the name itself. Further, the 4th digit of the PAN of all corporate assessee would necessary be �C�. Physical challans from such assessees shall not be accepted across the counter.

(ii) In case of tax payers covered under section 44AB, there should be no insistence of any proof of eligibility to pay tax through physical challans at the bank counters. The responsibility of making e- payment rests primarily with the taxpayer. Hence, the word of taxpayers should be taken as final.

(iii) the acknowledgement for e-payment should be made available immediately on screen by the bank concerned.

(iv) the transaction id of e-payment should be reflected in the bank�s statement.

(v) each bank should prominently display on its e-payment gateway page, the official /s to be contacted in case the taxpayer faces any difficulty in making the payment, completing the e-transaction, generating the counterfoil etc.

(vi) each bank should give the ITD and NSDL a list of officials with contact particulars, to be contacted if required for any problems faced by ITD or taxpayers.

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official words on online tax payments

Note: Credit/Debit card payments are not yet available