Tax refunds likely to be faster, returns filing may turn easier
January, 25th 2007
Next time you file your tax returns, chances are that you will fill up much simpler forms. Your long wait to get tax refunds may also be over. For, the finance ministry is working towards further simplification of the returns filing process and refunds. This is in order to boost tax collections in the country.
A key element for improving tax collections is a quicker and more transparent refund process-something which we are working towards, finance minister P Chidamabaram said on Tuesday while launching the refund banker scheme.Tax refunds are also important as no assessee would be willing to pay tax or would pay tax very conservatively, he added.
Faster refunds would also help the tax authorities save up on interest payments, he said.
Over the last few years, the revenue department has been working to make refunds faster, Chidambaram said, and the refund banker scheme would further help the process, he added.
Tax refunds stood at 26.52% of tax collections during 2002-03 and came down to 18.18% during 2005-06. Interest payment declined to Rs 3,866 crore during 2004-05, from Rs 6,286 crore in 2002-03. This fiscal, the income tax department is likely to issue about 44 lakh cheques amounting Rs 27,438 crore.
To enable quicker refunds, Chidamabaram also urged taxpayers to switch over to electronic clearing system (ECS), which is set to expand to 36 cities from the current 12.
SIMPLICITY RULES A key for improving tax collections is a quicker and transparent refund process Faster refunds will also help the tax authorities save up on interest payments To enable quicker refunds, FM urged taxpayers to switch over to electronic clearing system
The pilot refund banker project will operate in Delhi and Patna till March 31, this year. State Bank of India (SBI), which will act as the refund banker, will transfer the refunds directly into the accounts of assessees through ECS or through bankers' cheques. It will benefit 8-10 lakh assesses in two cities.
SBI will get Rs 5 if the money is transferred through ECS and Rs 10 as well as postal charges if the money is transferred through cheques.
Interestingly, service charge at a rate of 10.2% will be levied on the government for the transaction. With the scheme in place, tax authorities are confident that there will be fewer incidents of refund frauds.