"Service tax payment through Internet banking may also become compulsory," he said addressing a seminar on `Service Tax' organised by the Confederation of Indian Industry Institute of Logistics. When asked about the response to the `e-filing' option so far, he said it was "very poor". "There are perceptions that e-filing may ask for details that are not present in the paper form and that it is difficult to make corrections once e-filing is completed. But this is not so," he said. The new software is designed to guide users as they fill up each column in the form.

He said it should be easy for Chennai-based companies to make a transition to e-filing as about 90 per cent of them were delivering a soft copy format of their returns to Service Tax authorities.

The service tax collection from Chennai for the fiscal ending March 2007, was about Rs 2,530 crore, Rs 115 crore more than the Government target, Mr Jain said. "We are confident of collecting at least Rs 3,500 crore this fiscal," he said.

The Service Tax Department also plans to audit at least 1,000 taxpayers this fiscal. Last year, about 400 taxpayers were audited generating excess service tax collections of about Rs 30 crore. "So far we have taken a lenient stand on penalty. It may not be so in future," said Mr Jain.

He said an "in-principle announcement" had been made to impose a late fee for those failing to file their returns on time. "Those who are not in the taxable bracket (service providers with revenues of up to Rs 8 lakh) must surrender their registrations," he said.