Learner’s Submission: Online Tax Payment Services Offered by Banks in India

“In this article, I will discuss about the online tax payment services being offered by various banks in India.

Banks play a very important role in facilitating the various E-Governance initiatives of the Government of India and various State Governments. In various Government Schemes like  Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), Scholarship schemes for Students , pension schemes, LPG-subsidy schemes etc., the money is transferred directly (by the Government) to the bank account of the concerned beneficiary, through “Direct Benefit Transfer”. Such direct transfers eliminate the middle-men thereby enhancing transparency & effective governance, delivered by the Government directly to the citizens.

The Indian Banking sector has witnessed substantial growth during the last 2 decades. With the financial reforms during early 1990s and subsequent technology adoption by banks have led to Banks’ significant growth.  The new private banks with latest technologies like Core Banking Solution (CBS) from day one have prompted the “not so tech-savvy” public sector banks to adopt technologies.  With the Reserve Bank of India’s initiatives for greater technology adoption by banks, all major banks have now implemented CBS in their Banks. All major public sector banks now have technology infrastructures comparable to that of the private counter-parts. In India, today, all major private and public sector banks offer almost all technology-enabled services like ATM, Phone Banking(24×7 Call Centre), Internet Banking, Mobile Banking, National Electronic Fund Transfer (NEFT), Real-Time Gross Settlement (RTGS), Cheque Truncation system etc.

All major banks (public as well as private) in India now offer Internet Banking. Through Bank’s Internet banking, banks facilitate the online tax payment, in which the tax payer directly pays (online) the various taxes to the government. That too, with the comfort of sitting at home/office at any time convenient to the tax payer. Gone are those days when the tax payers had to stand in long queues for paying the taxes. Thanks to the Online Tax Payment Services!

Online Tax Payment Services by Banks

How it works:

The Government has arrangements with various major banks (public and private) in India for online tax payment services. The taxes include direct taxes (Income Tax, TDS, Corporation Tax, Security Transaction Tax, Estate Tax, Wealth Tax, Gift Tax, Cash transaction Tax, Fringe Benefit Tax etc.) and Indirect taxes (Customs, Excise, Service Tax), various State Government Taxes like Value Added Tax (VAT), Entertainment Tax etc.

Depending upon the arrangements made by the respective tax authority with the particular bank, there can be 2 models of how a tax payer can pay his taxes online.

Model-1: Through the Web Site of the Tax Authority.

Under this Model, the tax payer visits the web site (URL) of the concerned tax authority (example, for income tax, the tax payer visits http://www.incometaxindia.gov.in/). He selects/inputs appropriate options/values/amount, along with the choice of the “Bank” through which he wants to pay the tax. Depending upon the Bank selected, he is redirected to the respective Bank’s Internet banking site where he is asked to enter his Internet Banking login Id & password. The tax payer inputs his internet banking login id & password (additional authentication like Transaction password, One Time Password, Random number generated by a Token etc. may be required as per authentication procedure of the Bank).  On successful authentication, the transaction gets completed with instant debit of the amount from the tax payer account with the bank followed by credit of the amount to the account of the tax authority with the Bank. The tax payer also gets instant Acknowledgement (called e-receipt) of the tax payment.

Model-2: Through the Web site of the tax payer’s Bank.

Under this Model, the tax payer visits the Internet banking web site of his Bank (i.e. the Bank in which the tax payer maintains his account). For example, if the tax payer is having his bank account with Oriental bank of Commerce, he visits OBC Internet Banking web site https://www.obconline.co.in and logs in using his OBC Internet Banking login id & password (additional authentication like Transaction password, One Time Password, Random number generated by a Token etc. may be required as per authentication procedure of the Bank). Then the user (tax payer) selects appropriate options for the tax to be paid, amount, etc. The transaction gets completed with instant debit of tax payer’s account with the bank followed by instant credit of the amount to the account of the tax authority with the Bank. The tax payer also gets instant Acknowledgement (called e-receipt) of the tax payment.” – Srihari Subudhi – New Delhi, India

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