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This income tax filing season brings with it a heartening trend. One in every six tax payers is now checking online if the tax deducted by their employers every month has reached Finance Minister Pranab Mukherjee's coffers or not.
This month, by July 18, 5.3 million taxpayers had logged on to the Internet to verify tax deductions from their income. To put that in context, 34 million income tax returns were filed in 2009-10, while India has issued about 96 million PAN cards.
Over half of gross tax paid by individual taxpayers is through tax deducted at source (TDS). Getting accurate credits for the TDS from income, be it a salary or interest income on savings like fixed deposits, is the key challenge for individual taxpayers filing returns.
"The number of distinct PAN card holders that have logged on to view their Form 26AS, where TDS credits are compiled, has gone up from around 2.9 million in January this year to over 5.3 million this month," said Bhushan Maideo, senior vice president at National Securities Depository. NSDL administers the Tax Information Network (TIN) initiative of the IT department, which tracks direct taxes collection.
Form 26AS is a consolidated tax statement, generated for each PAN card holder since 2005-06, that includes all the tax deducted at source from your income, all the tax collected on your behalf by sellers, and any self-assessed tax payments made directly by you to the government.
Viewing the form enables individual tax payers to cross-check if deductions made by employers (in your Form 16) or banks (in Form 16A) have been accurately credited to the government and take corrective action, if not.
In the future, you will be able to use this consolidated tax statement (Form 26AS) as the only proof of tax payments along with your income tax return.
"Deductees are no longer required to provide copies of supporting documents like Form 16A and tax payment challan copies, while filing their income tax returns," pointed out Maideo. "The TDS statements previously filed by deductors in physical form are now filed electronically — eliminating more paperwork," he added.
PricewaterhouseCoopers' executive director Kuldip Kumar said these measures are part of the government's efforts to encourage more individuals to pay their taxes online by making them easier to pay. "Last year, taxpayers had to even provide details of credit card spends over 2 lakh and fixed deposits of 10 lakh. This year, both those clauses have been dropped and new simpler forms have been introduced," he said.
In 2010-11, 91 lakh returns were filed electronically out of about 3 crore returns. The facility to check tax credits online has been in place since August 2005. But in the initial years, the number of taxpayers using this facility remained in the thousands.
"To enable PAN card holders to view their tax credits, in August 2009, we opened up access for those filing e-returns on the IT department's website and account holders of 25 banks who use net banking facilities," Maideo told ET.
So part of the dramatic surge in taxpayers' usage of TIN's tools in recent months could be attributed to Indians' rising comfort with banking online instead of visiting their branch.
But a greater incentive is the control TIN grants individuals over their taxes – they no longer have to hope their employers or other tax deductors act in good faith and deposit the deducted tax on time.
"If the tax credits in your Form 26AS do not tally with your pay slips, or if there are any other errors or anomalies that you spot in your tax record, you can take up the matter with the deductor and ask them to correct their mistakes," said a chartered accountant with a leading firm, who spoke on conditions of anonymity.
The TIN website (tin-nsdl.com) lays out the procedure for taxpayers to rectify errors in their tax credits. If the deductor fails to set the record straight, TIN users have the option to flag the problem to a dedicated call centre.
Electronic filing and monitoring of taxes has led to a virtual elimination in paperwork for both firms and individuals. And now more tax deductions have been brought under the TIN net.
Just like salaried persons can use Form 26AS to tally the tax deducted from their income as per the Form 16 provided by their employers, tax deductions from other income like interest, commissions and investment returns can also be tracked online.
Source: Economic Times
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July 28, 2011