I-T may transfer refunds directly to bank accounts
July, 27th 2006
The excruciating delays in getting tax refunds from the Income Tax Department will hopefully end next month, I-T department promises.
From next month, the refunds will be calculated electronically and transferred to the tax payers bank accounts, instead of the current practise of sending it to the taxpayers address.
I-T chief commissioner, Mumbai, said Indira Bhargava that the new system of delivery requires tax payers to intimate the respective bank accounts to the department. Issuing refunds have been a matter of concern for the income-tax department for years and the inordinate delay in refunding the excess tax collected by the department has also marred the public perception of the direct tax authorities.
The I-T department also have been facing problems for delivering refunds on time. It could not help much because the department has to manually handle the hundreds of thousands of applications for refunds every year and hence could never manage to eliminate delays.
The prevailing system of refunding paved the way for complaints from thousands of tax payers every year. The computerisation process that began during the 90s has now evolved into a stage at which the department will soon be able to boast of quick delivery of refunds.
Putting in place a speedier system of delivery of refunds will benefit the department in two ways. First it can reduce the number of complaints that pour in day and day out and lift its image. Secondly, the department will be able to save the money spent on paying interest to the taxpayers for delay in refunding.
The taxpayer is entitled to interest for the delay in refund and this interest rate is in par with the market rate. In the past, the department also faced the embarrassment of certain big corporates choosing to park their money with the department and claim refund later so that they could earn interest which used to be higher than the prevailing market rate.
Refunding the excess tax collected is a major exercise of the taxmen as the amount refunded every year constituted nearly 10% of the tax collected. In advanced countries.