There are two modes of payment of direct taxes (i) physical mode i.e. payment by furnishing the hard copy of the challan at the designated bank; and (ii) e-payment mode i.e. making payment by using the electronic mode. In this part, you can gain knowledge about various provisions relating to e-payment of various direct taxes.

 Introduction

Earlier, we used to stand in queue for hours to book movie tickets, railway tickets, etc. but now we can relax at our place and perform these tasks using the internet. With the development of technology, the Government has also upgraded itself. Previously, the taxpayers have to wait in long queues at the banks for making the payment of tax, but after the introduction of e-payment facility one can pay tax quite comfortably from any place by using internet banking facility of the authorized banks.

 Mandatory or compulsory e-payment

It is compulsory for the following taxpayers to pay tax using the e-payment mode only (i.e., using internet banking facility). In other words, following persons cannot use the physical mode of payment of tax and have to pay the tax electronically using the epayment facility: 

·         All companies

·          All taxpayers other than company who are liable to get their accounts audited as per section 44AB.

Illustration

The income-tax liability for the financial year 2016-17 of Essem Ltd. amounted to Rs. 8,40,000. It wants to discharge its tax liability. Advice the company as to the mode of payment of tax.

 It is compulsory for a company to pay the income-tax using the e-payment mode only (i.e., using internet banking facility). Hence, Essem Ltd. has to pay its tax electronically by using the net banking facility.

 Illustration

Mr. Raja is engaged in the business of trading in food grains. The annual turnover of the business was Rs. 1,84,00,000. He wants to pay advance tax of Rs. 84,000. Advice him as to the mode of payment of tax.

 The turnover of the business of Mr. Raja exceeds Rs. 1,00,00,000 and, hence, as per section 44AB Mr. Raja will be liable to get the accounts audited.

 It is compulsory for the following taxpayers to pay tax using the e-payment mode only (i.e., using internet banking facility). In other words, following persons cannot use the physical mode of payment of tax and have to pay the tax electronically using the epayment facility:

·         All companies

·         All taxpayers other than company who are liable to get their accounts audited as per section 44AB.

 Mr. Raja is liable to get his accounts audited and, hence, he will be covered by (2) above, and hence he has to pay the advance tax electronically i.e. by using the net banking facility.

 Illustration

Mr. Vipul is engaged in the business of trading in fabrics. The annual turnover of the business amounted to Rs. 84,00,000. Profit for the year amounted to Rs. 8,40,000. He wants to pay his advance tax. Advice him as to the mode of payment of tax.

  The turnover of the business does not exceed Rs. 1,00,00,000 and, hence, as per section 44AB Mr. Vipul is not liable to get the accounts audited.

 It is compulsory for the following taxpayers to pay tax using the e-payment mode only (i.e., using internet banking facility). In other words, following persons cannot use the physical mode of payment of tax and have to pay the tax electronically using the epayment facility:

·         All companies

·         All taxpayers other than company who are liable to get their accounts audited as per section 44AB.

Mr. Vipul is not covered in any of the above discussed categories and, hence, it is not mandatory for him to pay tax electronically. Thus, he can pay tax by physical mode or electronic mode as per his choice. However, e-payment will be easy and will save time and efforts.

 Illustration

Essem Ltd. paid brokerage of Rs. 84,000 to Mr. Kapoor. The company deducted tax of Rs. 4,200 on the brokerage paid to Mr. Kapoor. It wants to pay the TDS of Rs. 4,200 to the credit of Government. Advice the company as to the mode of payment of TDS to the credit of the Government.

  It is compulsory for the following taxpayers to pay tax using the e-payment mode only (i.e., using internet banking facility). In other words, following persons cannot use the physical mode of payment of tax and have to pay the tax electronically using the epayment facility:

  All companies

·         All taxpayers other than company who are liable to get their accounts audited as per section 44AB.

The above provisions will apply to all forms of tax like advance tax, self assessment tax, tax deducted at source, etc. Hence, Essem Ltd. has to pay electronically the TDS to the credit of Government by using the net banking facility.

 Illustration

Mr. Krunal is engaged in the business of trading in food grains. The annual turnover of the business was Rs. 1,84,00,000. He purchased 1,000 quintals of wheat through a broker and paid him brokerage of Rs. 84,000. Mr. Krunal deducted tax of Rs. 8,400 on the brokerage paid by him. He wants to pay the TDS of Rs. 4,200 to the credit of Government. Advice him as to the mode of payment of TDS to the credit of the Government.

 The turnover of the business exceeds Rs. 1,00,00,000 and, hence, as per section 44AB Mr. Krunal will be liable to get the accounts audited.

 It is compulsory for the following taxpayers to pay tax using the e-payment mode only (i.e., using internet banking facility). In other words, following persons cannot use the physical mode of payment of tax and have to pay the tax electronically using the epayment facility:

·         All companies

·         All taxpayers other than company who are liable to get their accounts audited as per section 44AB.

 The above provisions will apply to all forms of taxes like advance tax, self assessment tax, tax deducted at source, etc. Hence, Mr. Krunal has to pay electronically the TDS to the credit of the Government by using the net banking facility.

 Optional e-payment

  As discussed earlier, e-payment is mandatory for all companies and all non-corporate taxpayers covered by audit under section 44AB. A person not covered in the mandatory category can voluntarily pay his tax by using the e-payment mode. E-payment saves time and efforts.

 Benefits of e-payment

 E-payment is time saving, simple, safe and this facility can be used at any time from anywhere.

 Requirements for making e-payment

 For making e-payment of taxes one should have only two things, an internet connection and a net banking enabled account in an authorised bank. If the taxpayer does not have a net banking enabled account, then he can make e-payment using a net banking enabled account of any other person but the tax should be paid in his name.

 Taxes which can be paid electronically

 Following direct taxes can be paid using the e-payment mode :

·         Income-tax

·         Corporate tax (i.e., income-tax paid by a company)

·         Tax deducted at source (TDS)

·         Tax collected at source (TCS)

·         Securities Transaction Tax (STT)

·         Wealth-tax and other direct taxes like gift tax, expenditure tax, etc

 Nature of challan to be used

 Following are the Challans to be used for making payment of different direct taxes:

 General details to be provided in the Challans to be used for making payment of tax.

 Following are few significant details which are common to all the above discussed challans: 

·         Correct Permanent Account Number of the taxpayer should be entered in case of payment of income-tax and correct Tax Deduction Account Number of the deductor should be entered in case of payment of TDS/TCS. 

·         Correct financial year/assessment year should be selected.

·         Correct address of the taxpayer is to be provided along with correct Pin Code.

·         Correct e-mail ID and correct phone number of the taxpayer should be provided.

Challan 280 specific details Challan 280 is to be used for making payment of Income tax and Corporate tax. Following are few important points to be kept in mind while providing details in Challan 280:

·         Taxpayer should make correct selection of applicable tax along with correct Code of respective tax. The Codes provided in the Challan 280 are :

1.       0020

2.       0021

Code 0020 is for income-tax paid by companies and Code 0021 is for income tax paid by non-corporate taxpayers.

·         Taxpayer should make correct selection of applicable type of payment along with correct Code of respective type of payment. The Codes for different type of payment provided in Challan 280 are :

1.       100

2.       300

3.       400

4.       106

5.       107

6.       102

Code 100 is for payment of advance tax, Code 300 is for payment of self assessment tax, Code 400 is for tax on regular assessment, Code 106 is for dividend distribution tax, Code 107 is for tax on distributed income to unit holders and Code 102 is for surtax.

Challan 281 specific details Challan

281 is to be used for making payment of TDS/TCS by corporate and non-corporate deductors/collectors. Following are few important points to be kept in mind while providing details in Challan 281:

1.       Correct selection of nature of deductee is to be made along with correct Code.The Codes provided in the Challan 281 are :

1.       0020

2.       0021

 Code 0020 is for company deductees and 0021 is for non-company deductees. 

2.      Correct selection of type of payment is to be made along with correct Code. The Codes provided in the Challan 281 are :

            1. 200

            2.  400

Code 200 is for TDS/TCS payable by taxpayer and Code 400 is for TDS/TCS to be paid on regular assessment. 

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