If an income tax (I-T) notice is bothering you for a tax payment already made, then there is a way out. The Central Board of Direct Taxes (CBDT) has notified the introduction of a unique transaction number (UTN) for every tax payment made by an assesse. The measure will help mitigate mismatch between the tax deducted by an employer or financial institution and also help in getting over anomalies in I-T payment made on inter-company transactions.

A senior taxation official said that although the notification has been issued, the success of the initiative will be known later especially since the issue is still being debated within the board. Some members feel that the success of other initiatives of the department have not been established fully and so the usefulness of this notification may be difficult to establish, he added.

The introduction of UTN, done through the revised Form 16, will increase the compliance burden on deductors who can be an employer or financial institution or a company depending on what count the income tax payment is made. Despite the burden, UTN is a better tracking mechanism as the number will be generated each time a tax challan is filed by a deductor, said Shalini Jain, senior manager, Ernst & Young.

Jain added, PAN helped in tracking TDS (tax deducted at source) credit on a quarterly basis, while UTN can be generated on a monthly basis. UTN will help the government track tax deducted each month for an individual employee. The Form 16 will be treated as a certificate under section 203 of the I-T Act, 1961 for the purpose of TDS on salary.

A set of UTNs will generated and the deductor will need to mention them while giving a tax certificate to the assesse, said the official.

The notification makes several changes in the I-T rules and introduction of the number is one of
them.

On why mistakes slip through and tax payers get notice on non-payment of tax even if they have paid, Shishir Jha, commissioner of income tax and CBDT spokesperson, said it could be triggered if the actual tax is not paid, tax has been paid but cannot be verified by data and if there is no information with the tax authorities.