THE FINANCE Minister, Mr P. Chidambaram, receiving the cheques of the `Refund Bankers' scheme from the SBI Managing Director, Mr Yogesh Agarwal, in the Capital on Wednesday. Kamal Narang

The Finance Minister, Mr P. Chidambaram, on Wednesday urged income-tax assessees to switchover to the electronic clearing service (ECS) for getting their refunds as and when this service gets extended to more cities.

"Currently ECS is available at 12 cities and there are plans to expand it to 36 cities. As ECS expands, more assessees should come forward to receive their refunds through this service rather than paper cheques," Mr Chidambaram said after launching a pilot project of `Refund Banker' for income-tax assessees in Delhi and Patna city.

A refund banker is a scheme wherein a scheduled bank is authorised to issue refund instruments on behalf of the income-tax department.

State Bank of India (SBI) would operate as the `Refund Bank' for the income-tax department at the pilot stage, which would run up to April this year. Mr Chidambaram indicated that more banks would be invited to take the role of refund bankers after the pilot stage was completed.

Refunds

Under the pilot project, refunds would be issued by SBI to assessees in Delhi and Patna city within three working days of the refund data transmission to the bank by the income-tax Department. About 12 lakh assessees in Delhi and Patna city are to be covered under the pilot project. Indications are that about 23,000 refund cheques would be processed by SBI over the next three months.

CBDT officials said that the refund would be issued by banker's cheque payable at par and under registered post acknowledgement due (for those who do not opt for ECS).

They also said that a refund order would be issued and this would advise the taxpayer about the details of assessment giving rise to the refund. The income-tax department would not do any pre-funding of the refund amount and SBI would have to first disburse the amount before claiming it from the Government.

Key element

Meanwhile, Mr Chidambaram asked the income-tax department to pay the same attention on refunds as it pays to tax collections.

"Refunds are as important as tax collections. They are a key element in improving collections. Refunds and tax collections are not unrelated matters," he said, adding that a quicker and transparent refund processes would lead to better and more efficient collection processes.

In 2005-06, the income-tax Department refunded Rs 30,033 crore. In the current fiscal, the refund determined by the department is Rs 27,438 crore.