Netting taxes: Online payment makes for better compliance

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The introduction of online tax accounting system by the income-tax department from the begin-ning of this month is another step towards making tax compliance easier for taxpayers.
Excise assesses and registered dealers who have been allotted the 15-digit excise control code can also start filing online returns from June 30, 2004. These steps are in addition to the existing schemes to enable the preparation and filing of tax returns electronically, such as eFiling, e-TDS, Suvidha, Sampark and are to be welcomed. Yet another way in which the Internet can be used to make tax compliance greater is by introducing online payment of taxes through debit cards. This gives an option of paying taxes at any time of the day or night in just a few minutes. The taxpayer can fill out a simple to use, self-explanatory electronic challan, with a predetermined set format, and submit it electronically to the tax collecting authority. Receipts can also be issued electronically and can be printed by the taxpayer for his record. I-T returns will still have to be filed, either on paper or electronically. However, this option provides the taxpayer with an alternative to spending time in getting a paper challan, writing a cheque, and taking it across to the designated bank or tax collecting authority. The tax department may even be able to charge a “convenience” fee for this service of 1-3 per cent of the total tax. From the taxpayers' point of view, payment by card raises concerns relating to privacy and security of information which have to be dealt with. Online privacy can be maintained by using software with a dedicated code for each taxpayer, which also defines users of the data filled in by the taxpayer and restricts its use to them only. Security concerns can be addressed by the use of data encryption technology, which 'scrambles' the information sent over the Internet so that only the computer it is intended for can read it. The I-T Act 2000 has already made online transactions and digital signatures legally valid. India's Internet population is expected to rise to 46 million users by March 2005, and will be second only to that of China by 2006. While industry estimates put the number of credit card users in India at around 14 million, the increase in debit card users are higher than that of credit card users. Clearly, the government needs to constantly pursue innovate ways to shore up the tax base and the mode of online payment of taxes will be welcomed by many and should be provided.

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