collection

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Learning Objective

By the end of the session, Participants will be able to : Differentiate between two types of taxes Appreciate the process of direct tax

collection Describe the bank’s role in tax collection State the benefit of providing this service

by the bank

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Tax payment

How do people remit taxes due to the Government?

How does the money reach the Government?

What are the types of taxes that people pay?

What role do Banks play in tax collection? Has technology made a difference to this ancillary service?

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Types of taxes collected through banks

• Directly levied on the income of the customer

Direct taxes

• Not levied on individuals, but on goods and services.

Indirect Taxes

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Activity

Categorise the following into Direct and Indirect taxes

Corporate TaxExcise dutyInterest Tax Gift TaxStamp duty Securities Transaction Tax

Income TaxSales taxFringe Benefits Tax Estate DutyWealth TaxCustom duty

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Types of taxes collected through banks

• Income tax• Gift tax• Corporate tax• Interest tax• Securities transaction

tax• Wealth tax• Estate duty• Fringe benefit tax

Direct taxes

• Custom duty• Excise duty• Sales tax• VAT• Stamp duty

Indirect Taxes

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Problems faced in tax collection Unable to handle work load owing to

exponential rise in taxpayer numbers and collections

Too much time lag between tax challans presentation at banks and their manual transfer to Department

Problem in manual tracking of paper tax challans

So there was a need for rapid transfer of tax collection data between bank and tax department

Hence OLTAS (Online tax accounting system) was introduced in June, 2004 in banks for direct tax accounting.

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OLTAS work flow

Tax payer

Collecting branches

Nodal Branch

ZAO

RCC, ITD

Bank’s Link at Nagpur

NCC, ITDRBI,

CAS, Nagpur

TIN

Pr.CCA, New Delhi

Govt Account

Single challan

Payment

Phys Movt

Reports Online

OnlineReports Online

Recon Reports

OnlineOnline

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Challan for remitting direct tax

How does the new system of OLTAS benefit the common tax payer?

What is the new procedure for payment of direct taxes at bank?

What is CIN (Challan identification number) and what is its relevance?

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Challan status inquiry for tax payer

Payers have to log on through https://tin.tin.nsdl.com/oltas/index.html to view whether the challan for the tax payments is received by TIN.

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Activity

Refer the exercise-1 of tax collection from work book-session 11 for class room activity Case study

Non-class room activity: Class to be divided into 10 groups and ask them to collect information on six types of tax challans from different banks and make presentation on procedure of tax payment procedure in session-14 Refer work book session-14 for understanding the activity

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There are two types of taxes collected by banks namely, direct taxes and indirect taxes

Direct taxes are directly collected on the income of individual

OLTAS (Online tax accounting system) was introduced in June, 2004 in banks for direct tax accounting

Through OLTAS the customer has to fill only one challan compared to earlier 4 challans

For different taxes different challans need to be filled

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In the next session, you will learn Indirect tax collection

e-payment of taxes