Circular No. 3-Income Tax dated 11-2-1969

1. Up to March 31, 1976, income-tax and other direct taxes were collected mainly by the Reserve Bank of India and by some of the branches of the State Bank of India or subsidiaries of the State bank conducting  Government business. Because of the restricted number of points at which payment of direct taxes could be made, the taxpayers were put to considerable inconvenience. They were required to travel long distances particularly in metropolitan cities and also experience other avoidable difficulties.

2. With the major objective of providing greater citizen satis­faction, a new scheme was introduced with effect from April 1, 1976 initially at 8 metropolitan cities namely: Ahmedabad, Banga­lore, Calcutta, Bombay, Delhi/New Delhi, Hyderabad, Kanpur and Madras. The number of points at which payments of direct taxes could be made, were considerably increased. In addition to the Reserve Bank of India and the State Bank of India, the branches of 2 to 3 public sector banks were authorised at each of these 8 cities to accept payment of direct taxes. With effect from Novem­ber 15, 1976, this scheme was extended to another 66 cities/towns in the country.

3. As a further step in this direction, with effect from April 1, 1977, the facility of payment of direct taxes through all the branches of the State Bank of India and other authorised public sector banks is being extended to the remaining 296 cities/towns where the income-tax offices are situated.

4. Wherever the income-tax offices are located, payment of direct taxes can be made at all the branches of the Reserve Bank of India, State Bank of India and two or three specified public sector banks by cash or by cheque or draft drawn on any local bank at the place of payment. Out-station cheques or drafts can, however, be tendered only at the branches of the Reserve Bank of India/State Bank of India or its subsidiary banks which were accepting such cheques/drafts before April 1, 1976.

5. In a place other than the 370 cities/towns, where there is no income-tax office, the branch of the State Bank of India or its subsidiary bank which is at present conducting Government busi­ness at that place, would continue receiving payment of direct taxes. In Lakshadweep Islands, however, the Syndicate Bank will receive payment of direct taxes from April 1, 1977.

6. Taxpayers are requested to ensure that in the case of payment of advance tax, self-assessment tax and tax deducted at source, the challans filled in by them should contain all the requisite particulars, full name and address of the taxpayer, assessment year, income-tax ward or circle, major classification head and Permanent Account Number should invariably be indicated in the challans presented to the bank. Wherever applicable, tax and surcharge should be shown separately in the space allotted for this purpose in the relevant challan. Taxpayers would get re­ceipted copies of the challans in proof of payment from the branch of the bank at which the payment is tendered.

7. A list showing the names of public sector banks which will collect direct taxes from April 1, 1977 at various places where the income-tax offices are situated is reproduced below.

8. In view of the large increase in the number of receiving points under the present scheme at each of the places where the income-tax offices are situated, the scheme of receiving cheques in the income-tax offices vide Board’s Circular No. 3 [F. No. 16/5/69-IT Coord.], dated 11-2-1969 [annex] is being withdrawn.

NAMES OF SPECIFIED PUBLIC SECTOR BANKS WHICH WILL COLLECT DIRECT TAXES FROM APRIL 1, 1977 AT VARIOUS PLACES WHERE  THE INCOME-TAX OFFICES ARE SITUATED

Letter: F. No. 385/12/77-IT(B), dated 31-3-1977.

ANNEX – CIRCULAR NO. 3, DATED 11-2-1969 REFERRED TO IN CLARIFICATION

1. According to the existing instructions, taxpayers are required to pay normally their tax dues under the direct taxes, i.e., income-tax, wealth-tax, gift-tax, estate duty, expenditure tax, etc., directly into the Reserve Bank of India, State Bank of India/Government Treasuries. For their convenience, it has now been decided that the payment tendered by crossed cheques will hereafter be accepted in the income-tax offices.

2. The taxpayers are, however, requested to conform to the following procedure which having regard to the banking provisions and need for proper accounting has been devised in their own interest:

1. All payments must be made by crossed cheques.

2. In the cities of Bombay, Calcutta, Madras, New Delhi, Kanpur, Bangalore and Nagpur where the Government business is transacted by the Reserve Bank of India, cheques should be drawn payable to (i ) “The Reserve Bank of India” or (ii) “The Income-tax Department”.

3. In other cities where the Government business is transacted by the State Bank of India or its subsidiary, the cheques should be made payable to the “Income-tax Department” and should not be drawn in favour of any Departmental Officer either by name or by designation.

3. The challan should be complete in all respects and should accompany the cheques for the same amount. They should be presented with a pay-in-slip available at the pay-in-counter.

4. A provisional receipt bearing the seal of office, duly signed and countersigned, will be given in acknowledgement of the cheque. The taxpayer’s copy of challan can be collected by him from the counter some time after the cheque has been cleared and credited to the Government account.

5. For removal of all doubts, it is clarified that the date of tax payment will be the date on which the proceeds of the cheque are realised and credited to the  Government account.

6. Taxpayers are requested to note that the cheques tendered by them in payment are drawn by them. Where, however, it is not possible and the taxpayer has to tender third party cheque in payment of the tax dues, the foregoing procedure will have to be supplemented by the following:

The third party should draw the cheque directly in favour of the Income-tax Department and such a cheque should be accompanied by a letter from the drawer of the cheque.