Kerala is all set to blaze a new trail in tax collection in the country with the launch of electronic payment of Value Added Tax (VAT) on Tuesday.

As many as 1.30 lakh traders are expected to switch over to the e-payment system, which will both speed up tax collection and lessen the difficulties being experienced by traders in paying taxes. The State had switched over to electronic filing of tax returns beginning January 1 this year and the e-payment system is being introduced to take the tax reforms initiated by the Left Democratic Front (LDF) government and its Finance Minister T. M. Thomas Isaac to the next level.

Initially, only traders having the Tax Information Number (TIN) with a turnover exceeding Rs.10 lakh are required to go in for e-payment. Around 25,000 to 30,000 traders who fall in the category of presumptive tax payers with an annual turnover not exceeding Rs.10 lakh will be exempt from the scheme for the time being.

The government had done the same when launching the e-filing system. According to Dr. Isaac, this is the next logical step now that the State has achieved 100 per cent e-filing of returns.

P. Mara Pandiyan, Principal Secretary, Taxes, told The Hindu here on Monday that the new system would make the tax collection system relatively fool-proof and ensure that the government got the tax revenue without any time lag.

Normally, the government gets the tax paid by a trader only about a fortnight after the actual payment is made.

Under the present system, the trader can make the payment online, get an electronic chalan and also the information whether he/she has made the correct payment and whether he/she is eligible for any tax refund.

The Commercial Taxes Department has tied up with State Bank of India and State Bank of Travancore to facilitate e-payment of taxes and integrated its web sites with that of the two banks. The web site of the Commercial Taxes Department has been audited by STQC, a Government of India agency, to ensure its security.

The departments has also provided for Verisign SSL Certification to ensure safety of the transactions.

According to Mr. Mara Pandiyan, the department has subjected the system to several trials over the last few weeks to identify potential glitches and to ensure that the system is fool-proof.