In a move to encourage non-cash transactions in the country and to curb the flow of black money, the government has proposed tax benefits for individuals using their cards to file their tax returns. This mode of payment will make the accounting process much simpler and will increase the processing speed of the transaction. The move will help build a transaction history of the individual which will improve the credit access of the individual and will financially include the individual in the system. Non-cash transactions will discourage tax avoidance among individuals and will reduce the flow of counterfeit currency.
Tax Benefits for Income Tax Payment via Credit Card
- The payment of income tax via credit card will allow the user to file the challan online and will provide an immediate acknowledgement of remittance.
- A receipt in the form of a challan will be produced which will include the Corporate Identity Number (CIN) that can be downloaded and printed for reference and record.
- Individuals can remit taxes on behalf of the firm, company and others from a desktop at any time.
- Transaction charges at petrol pumps, gas agencies and railway tickets will be removed.
- Individuals will receive tax rebates if they use their credit/debit cards or electronic means to pay a portion of their utility bills.
- The Merchant Discount Rate (MDR) is a fee charged by banks to merchants for accepting payments through credit/debit cards. The government has proposed a reduction in the MDR to encourage merchants to accept payment through cards.
- The government will provide a tax rebate to merchants that have performed up to 50% of their transactions through cashless means.
- A 1% to 2% reduction in VAT will be given to merchants on cashless transactions.
- The interchange fees on credit/debit cards will be standardised across the nation for better adaptability.
- The PayGov India payment gateway will be the largest integrated payment gateway in India to make a variety of payments, including income tax, via credit cards. This system will simplify the entire process of income tax payments.
- Payment of income tax via credit card will give both the taxpayer and the government an accurate record and historical data of payments.
Steps for Payment of Income Tax via Credit Card
- Login to the NSDL-TIN website.
- The individual will need to select the challan applicable to him/her i.e. ITNS 280, ITNS 281, ITNS 282 or ITNS 283.
- The taxpayer will need to enter the PAN/TAN as applicable. There will be an online verification of the PAN/TAN entered.
- Once the PAN/TAN is authenticated the taxpayer will be allowed to fill up the challan details, such as, the bank through which the payment is being made, the accounting head under which the payment is being made, name and address of the TAN/PAN, etc.
- After the submission of the data a confirmation screen will appear. Once the taxpayer confirms the data entered, he/she will be redirected to the net-banking website of the bank.
- The taxpayer will need to login to the net-banking site with his/her user ID and password to enter the payment details for the transaction.
- After successful payment a challan counterfoil will appear containing the CIN, the transaction amount and the bank through which the payment was made. The challan counterfoil works as proof of payment of tax.
Steps to file Service Tax
Starting 1st January, 2014, assesses who have to pay more than Rs.1 lakh in service tax during the previous financial year will need to make this payment online. The steps involved in payment of service tax online via credit card are listed below:
- Login to the NSDL-TIN website.
- Select the option for e-payment.
- Fill in the 15 digit Service Tax Registration number as provided by the Income Tax Department.
- The NSDL website will prompt a captcha code, the taxpayer will need to fill this.
- An online verification of the details entered will take place. Once the details are authenticated they will be stored in the Assesses code master and will appear on the screen.
- The taxpayer can select the accounting codes for which the tax is being filed and for which service the tax is being paid.
- The education cess applicable will need to be selected.
- After submission of the above details the taxpayer will need to select a bank of choice to make the payment through.
- After selecting a bank the taxpayer will be redirected to that bank’s net-banking portal to enter the login details.
- Once the amount is filled in for the payment of service tax and the payment is made, a page will appear showing the confirmation receipt and a Challan Identification Number (CIN) for future reference.
- The CIN can be used to track the payment of the service tax.