Income Tax Refunds to be Put Directly in Bank Accounts

New Delhi: In a step that would bring delight to taxpayers, the Income Tax Department has put in motion a new plan which will ensure that any refund on tax paid is safely deposited in their personal bank accounts as soon as it is processed and released.

The department is also planning to fully adopt and use banking services to end the current system of sending I-T refunds over the value of Rs 50,000 via cheques through the Postal Department.

During a recent interaction with the media, Central Board of Direct Taxes Chairperson Anita Kapur said the plan is being worked out on priority and is aimed at bringing an end to taxpayers' grievances regarding this particular service.

She said that CBDT got in touch with banks and the Reserve Bank of India (RBI), their regulator, after it found that the problem of wrong refunds or no refunds at all was continuing unabated.

The RBI, Ms Kapur said, told them that in the e-environment, when a refund is sent directly to a taxpayer's bank account, the existing protocols are such that banks do not match the name to the account number.

"They only look at the account number and to whichever account number the cheque is issued, the (refund) will get credited there."

"We have a large number of instances where people quote wrong account numbers and if we were to send refunds to those account numbers and the banking system does not match the account number with the name then the chances of taxpayers being further aggrieved are much larger," the CBDT chief said.

Ms Kapur also said that after analysing the problem, CBDT, which is the apex policy-making body of the Income Tax Department, thought of bringing about some changes.

"Now, we are trying to work out a system that when a taxpayer gives his account number and if we can do some kind of prior matching with the bank... that is one step we are going ahead and if we get the comfort-level that the bank account number and the name of the taxpayer matches, we should be able to push all the (refunds) automatically to the bank account rather than sending them through speed-post, which is the current practice," she said.

Ms Kapur said the department's aim is to ensure that the cost of compliance for a taxpayer vis-a-vis his or her tax liabilities becomes as low as possible and that grievances are handled and resolved on priority by the I-T department.

"We have put grievance redressal on our priority accelerator; all taxpayer grievances must get redressed within the timelines that we currently have. We try and redress grievances within 60 days of filing and, if there is some complicated issue, then it will take some time."

"But the general norm should be 60 days and all grievances get redressed," she said.

The CBDT Chairperson said that Prime Minister Narendra Modi had some time back held a review in this regard following which she had written to her field offices to ensure that the message of facilitating the convenience of taxpayers percolated through the ranks.

"After that (PM's review), I had written to my officers again that please understand that for a small taxpayer, if the credit is not given for certain taxes or there is some other issue, then his or her problem is a universal problem because he or she faces the department for only their own case," she added.

"So, we have to be sensitive to their concerns and try and get all the grievances resolved."