E payment of Taxes practical issues

Aisha (Finance Professional) (7874 Points)

07 June 2008

Mandatory e -Payment : Practical Issues

From 1st April 2008, payment of tax has been made mandatory for all corporates and firms covered under tax audit. During the first month , many practical issues werefaced by depositors. Some of these are discussed below :

Only few Banks authorised

Only 27 banks are authoried to accept online payments.Persons not having account with one of this 27 banks have no option but to open a new account.

Debit Card/ Credit Card payments

Although the press release mentioned that tax payers will also be provided with an option to make electronic payment of taxes through internet by way of credit ordebit cards , the same is still not available.

Banks still accepting physical challans

Several banks continued to accept physical challans andcheque payments from corporates. In this respect, theletter from RBI to the banks , No RBI/2007-08/ 280dated April 10, 2008 is as follows :

The following instructions may be kept in mind while implementing the Government Notification:

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.

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.
- the acknowledgement for e-payment should be made available immediately on screen by the bank concerned.
- the transaction id of e-payment should be reflected in the bank's statement.

each bank should prominently display on its epayment 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.

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.

What if e-payment is not made ?

A new rule 125 now makes e-payment obligatory for corporates and persons covered by 44AB. The rule is:

125. Electronic-payment of tax.

The following persons shall pay tax electronicallyon or after the 1st day of April, 2008:-

(a) a company; and

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

For the purposes of this rule :-

(a) pay tax electronically shall mean, payment of tax by way of-

internet banking facility of the authority bank; or

credit or debit cards;

(b) the word tax shall have the meaning as assigned to it in clause (43) of section 2 of the Act and shall include interest and penalty.

The FAQs issued by income tax departments do not tell the consequences of not making the payment of tax through the mandatory e-payment mode.
What will be the legal consequence of paying through the normal mode is not clear at this stage.

Organistions with multiple TAN

Many organizations have multiple branches and each branch has a separate TAN. In such a case , making e payments poses different kind of problems

How to share login and password with so many users . Example , a company having 100 branches will have to share login and password with 100 authorised persons .

Considering the risk involved in such cases , the e payment may be centralized . The problem in that case will be time and effort involved in the process. In the same example if 100 branches have average 4 TDS challans to be deposited, a user will have to fill the details 400 times , access payment gateway 400 times to complete the transactions. There is no bulk upload facility available at this moment.

Some organistions have addressed the problem by opening a separate account only for epayments and allowing branch personals to transfer requisite amount to this account and making epayment.

No minimum threshold

There is no minimum limit suggested for e payments So small and medium organizations will find it difficult to manage e-payments . Tax payers areexpecting that for total payments below a certain threshold say Rs. One lac a year, e-payments should be optional.

Such small clients are requesting their chartered accountants to make e-payments on their behalf.

e-Payment Reference No

After e-payment a reference number is generated by the payment gateway. Each bank has a different format for this number. No fixed format is being followed.