E- Tax payment system: Speedy and Preferred way of Tax Payment

To understand the Income Tax rules and procedures or computing of tax liability is always considered a complex and difficult process. Previously, tax management required a lot of time in form filling because of paperwork, documentation. It also required the assistance of an expert. It takes a lot of time and energy in filing Income Tax return form and after filling of the form, standing in long queues to do submission of Income Tax return or challan for the tax payment.

Due to advancements made in technology, the tax management system observed a positive change. Still, the government is making loads of efforts in improvising the tax management system further with the help of digitization to do better streamlining the Income Tax procedure starting from filling of form to update the assessment order online.

After doing the digitization of Income Tax Payment procedures, system of electronic payment of Tax (E-Tax) has been developed which is successfully implemented.

Where all Income Tax Management is on Digital platform?

E-Filing of Income Tax Return: It becomes mandatory for many taxpayers to do only E-Filing. It helps in facilitating speedy filing of Income Tax returns. It also results in faster refund processing.

Online Payment of Taxes or E-Tax: The government introduces an online platform for making Income Tax payments. The new system of E-Filing tends to replace the old system of filing a hard copy of Income Tax challans and doing the submission of the same to the banks and getting the acknowledgment of the same. The benefit of using the online platform for payment of taxes is that it enables easy payment of TDS and income tax by all the taxpayers.

E-Tax online Payment process

E-Payment of tax can be made from any location or sitting anywhere and at any time. By using this E-Payment process, one gets an instant receipt also along with instant Income Tax payment confirmation. Steps to follow for making online payment of tax:

Step-1: To pay taxes online, login to https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp

Step-2: Select the relevant challan – ITNS 280, ITNS 281, ITNS 282, ITNS 283, ITNS 284 or Form 26 QB demand payment (only for TDS on sale of property), as applicable.

Step-3: Provide PAN/TAN (as applicable) and other form of mandatory challan details like under which accounting head payment is made, address of the taxpayer and the bank through which the payment is to be made, etc.

Step-4: After doing the submission of the data, a confirmation screen will be displayed. If PAN/TAN is valid according to the ITD PAN/TAN master, the full name of the taxpayer as per the master will be displayed on the confirmation screen.

Step-5: After getting the confirmation of data, which is entered, the taxpayer will be directed to the net-banking page.

Step-6: After doing login to the net-banking site with the user id/password provided by the bank, enter the payment details.

Step 7: On making successful payment, challan will be displayed which contain payment details, Bank details and CIN.

Working of the E-Tax

E-Tax is an online portal of the Income Tax Department which aids all the Tax related issues. All the payment of E-Tax is being facilitated by the Tax Information Network (TIN) which is the department of Income Tax and managed under the supervision of the National Securities depository Limited (NSDL). Tax-related issues handle by the E-Tax are as follows:

  • Permanent Account Number (PAN): It is a 10-digit alphanumeric number. Every person who is liable to pay Income tax under Income Tax Act requires a PAN which is to be quoted in all challans, forms and at the time of doing communication with the Income Tax Department. PAN also used as a login assessee of the Income Tax return filing website. Information related to return filed, tax to be paid or assessment return are linked to the PAN. Tax Information Networks portal provides an online application for PAN, applying for any PAN amendments and reprinting of PAN.
  • Tax deduction and collection Account Number: As an accessor whether it is from corporate or non-corporate, get income from business and making of payment in the form of technical charges, salary or any profession, needs to deduct tax source as per the provision of Income Tax Act. The amount which gets deducted in the form of tax needs to be deposited with the Income Tax department of India. It is a must to have TAN for doing TDS deduction. To get TAN, the application submitted to TIN of the Income Tax Department.
  • E-payment of Taxes: TIN of the Income Tax department is key facilitators for making an online payment of taxes. It is an online service introduced for the taxpayers to make payment of direct taxes. This facility can be available for all assessee who holds a valid PAN and TAN and having a Net Banking facility along with that.
  • Electronic Return Acceptance and Consolidation System: It is a web-based Interface between the Income Tax Department and Taxpayer. It helps in making a payment, tax deducted or collected at source and filing annual and quarterly return for the same (Annual Information Return).
  • Online Tax Accounting System: Income Tax department does a maintaining of the tax paid by all taxpayers. OLTAS helps with doing centralization of the tax collected from various branches across the country.

Overall E-Tax falls under the purview of TIN.Benefits of using E-Tax are as follows:

  • Reduces the amount of paperwork.
  • Saves loads of time
  • Taxpayer can pay all forms of tax be it Income tax, Tax deducted at source or Wealth Tax. All one need to do is choosing of right challan under option of e-payment in the’ services ‘tab of the website. E-Payment System is the online service provided for payment of Direct taxes by the taxpayers.
  • Online payment is being promoted by 30 authorized banks which include public sector banks like State Bank of India and associated well with private sector banks such as HDFC and ICICI Bank.

How to choose right challan for the making Income Tax Payment

Payment of Income Tax: It is the most relevant type of challan uses by the taxpayer. When the taxpayer is a salaried individual. The tax deducted at source done by the employer. When it is the case of self- employed individual, one needs to pay own taxes. Further, if any income earned is from house property or fixed deposit formerly also tax needs to be paid and above that TDS (Tax Deducted at Source). Income tax provides the payment of advance tax during the year.

Who pays tax?

Pre-requisite for Payment of Income Tax: For this, the taxpayer needs to have two important things which are PAN and Net Banking account. He or she needs to do the computation of his or her tax liability under the Income Tax act and make payment under the appropriate category that can be advance tax or self-assessment tax etc.

Method to pay Income Tax

Challan No, /ITNS 280 used for the payment of Income-tax in both cases either it is for individuals or companies. Taxpayer needs to click on the challan and fill all the required information as follows:

Choosing of entity paying that tax – whether income Tax paid by companies or an entity or individual.
Enter PAN (Permanent Account Number)
Enter Assessment Year. For Financial Year 2016-2017, Assessment year will be 2017-2018
Enter other information like mobile number, address and Email address
Taxpayer needs to select the type of Income Tax, he or she intends to pay such as Regular Assessment Tax, Advance Tax or Self-Assessment Tax etc.
The name of assessee displayed as per the database of the Income Tax. Confirmation is needed from the taxpayer side before making payment. It is necessary to enter PAN accurately and double check the same.
Taxpayer needs to make selection of bank through which he or she makes the payment.
Taxpayer enter the amount payable under various heads which are surcharge, basic tax, penalty etc. via the bank site.

After confirming the payment, the bank debit tax amount from your account. Generation of Challan Identification number takes place with the mentioning of challan number and date. Amount paid to the Income Tax department updated on the database of income tax and credited the same which is reflected in the taxpayer’s form 26AS.

Form 26AS is a form in which one gets to know all information about total tax which is being credited from the account of the taxpayer. There is a week lag time between details that reflected in 26As and payment needs to be made as income tax.

Payment of Taxes other than the Income Tax: Income Tax paid via challan No. /ITNS 280, while Challan No, /ITNS 282 is used for payment of Wealth Tax, gift tax, commodities transaction and payment of securities transaction tax, etc. The method of filling the challan and making of payment is the same as of payment of income tax. The pre-requisite of holding a PAN and net banking account exists.

Payment of Tax deducted at Source: Section 192 of Income Tax Act provides tax deduction from source of payment through wages or salary. In the case of salary, TDS deducted by the employer, whether it is an individual or source. Further, also, the Income Tax Act provides a deduction of tax at source on payments like rent interest, contractors or any interest earned on fixed deposits, royalty charges or professional technical services, etc.

Who needs to deduct tax at source?

According to the Income Tax Act, all non-corporate individuals and companies which are carrying out profession and business need to do TDS deduction as prescribed under the Income Tax Act. It is subjected to an audit under Section 44AB. The person who deduct Income Tax is known as deductor and to whom payment made post the deduction of tax is also known as deductee.

What is to be done with the tax deducted?

The tax which is being deducted needs to be paid to the department of Income Tax before the 7th day of subsequent month by the deductor in which tax is being deducted.

Pre-requisite for payment of Tax Deducted/ Collected at Source. There are some conditions before making payment are:

  • The person deducting the tax should have a valid 10-digit TAN.
  • Before filling the challan, it is important to do the computation of amount of TDS payable under various heads like rent, salary, professional services, contract, etc.
  • A separate challan requires to be filled for Tax Deducted at Source under each category.
  • A separate challan also requires to be filled for tax deducted at source against payment made to companies and tax deducted at source for payment made to non-corporate.

Procedure for making TDS Payment

For TDS Payment, challan no. /ITNS 281 to be filled by the deductor. It is filled by both non-corporate and corporate. Following details need to be filled in the form mentioned below:

Choosing whether tax collected or deducted at source for a company and non- company. Separate payment deduction needs to be made by both companies and non-companies.
TAN of the tax deductor
Enter financial year and assessment year in which TDS is to be deducted. The assessment year for Financial year 2020-21 will be 2021-2022.
Providing information like address, email address and mobile number.
Tax deductor needs to select on the type of payment I.e. TCS or TDS which is payable by the taxpayer and is being paid after Income Tax done the regular assessment.
‘Nature of Payment’ selected by the tax deductor. After the tax deductor selects the category under which tax is deducted either on the payment of salary (92), rent (94I), payment of interest on securities (193) or payment of profession fees(94J). Specific code being assigned to each type of payment along with the description for better understanding of taxpayer. Tax deductor need to make selection of appropriate nature of payment. Please make sure that different Challan for different nature of payments.
The name of assessee as per the Income Tax database is reflected and taxpayer needs to provide confirmation before making payment. It is must to mention TAN details and double check the same.
Tax deductor select the bank through which he makes the payment.
After selecting the payment option, Taxpayer redirected to the bank portal in which he or she needs to do net banking login and put the password and enter the tax amount and confirm the same.
There is also a provision to enter amount under various heads like interest, surcharge, penalty etc. It is provided on the website of bank.
After getting confirmation of payment, amount deduction takes place from the tax deductors account and challan which specifies TAN, Challan identification number, date of payment and amount and nature of payment also being reflected.
The amount paid by the tax deductor updated in the database of Income Tax. After that amount is being credited from the account of deductee and appear as a credit in form 26AS.
After a quarterly TDS return, the credit to the deductee is filed by the deductor specifying individual names, PAN and the deducted amount.
When payment of TDS done by an individual who is purchasing a property but does not have a TAN. According to the Income Tax Act, section 194 AI, any person who makes a purchase of immovable property worth Rs 50 Lakh and above needs to make deduction of tax at source @1 percent before making of the payment to seller.
TAX deducted is being deposited to the Income Tax department within 07 days from the end of month in which tax is to be deducted. The buyer needs to submit Form 26QB and pay the tax amount.

Procedure for filling form 26QB: The form one can find on the e-payment section of TIN of the Income Tax department.

Details related to form 26QB are mentioned below:

  • Transaction related to Financial year and assessment year.
  • Type of payment. In this case, it is TDS on Sale of property.
  • Status of the Seller – whether the seller is a ‘Resident’ or Non-Resident.’
  • PAN of the buyer. Once the PAN is entered, the category of the transferor (individual, corporate, etc.) is auto reflected along with the name as per the database of the Income Tax department.
  • In the same manner, all transferee details also need to be entered and the name is to be confirmed.
  • Other details like address, email, and mobile.
  • The details of the property bought like address.
  • Date of agreement, the total value of consideration, payment type (Complete or Instalment based
  • Details of the amount to be paid/credited along with the TDS amount and date of tax deduction.
  • For making an online payment, the buyer needs to select the e-tax payment as the mode of payment and select the bank through which he/she intends to make the payment.
  • Thus, the buyer can make payment of TDS online and receive a copy of 26QB and issue a Form 16B to the seller of the property, confirming the credit of tax to the seller’s account.

Under the Income Declaration Scheme, e-payment option is available for the payment of taxes by using a challan number No. / ITNS 281.