Lower collections lead to revamp oF Online tax

The finance ministry is considering making changes in the online tax accounting system (OLTAS), with the software, introduced last year, showing a lower direct tax collection of nearly Rs 5,000 crore during 2004-05, compared with the data complied manually by the tax department.

"We are considering introducing two copy challans instead of the single copy that was introduced last year. This will enable banks to retain a copy while one will be sent to the income tax department," an official told Business Standard today.

At present, the single-copy challan has a main copy and a taxpayer's counterfoil. The bank, where the taxpayer fills the challan, forwards the main copy to its zonal office which in turn sends it to the zonal accounts office and returns the counterfoil to the taxpayer after stamping the unique challan identification number (CIN).

"Since the copy of the challan does not come to the income tax department, we are planning to introduce a two-copy challan so that the department can also verify the data," an official said. Thirty-one banks and the Reserve Bank of India at eight centres are collecting taxes through OLTAS.

According to officials, one of the reasons for the lower tax collection can be attributed to a delay by banks in uploading the data online. "The revenue department has already taken up the matter with the RBI," officials said.

They also said the need for the tax department to receive a copy of the challan was also being felt as there were errors in entries made by banks in relation to the permanent account number or the tax deduction account number.

"Since banks do not have the expertise, tax is often entered under a wrong payment head," officials said.

The format of the new challans introduced in June last year had led to a situation where over Rs 6000 crore had been wrongly shown as income tax rather than corporate tax till October and nearly 50 per cent of the challans filed were in the suspense account because of wrong entries of permanent account numbers or tax deduction account numbers. The situation was later rectified.

A challan through OLTAS can be used by corporates and non-corporates to file corporate tax, income tax, wealth tax, gift tax, tax deducted at source, estate duty, expenditure, and other direct taxes.