Modification of procedure regarding discharge by payee in case of income-tax refund orders
1. At present, the payee is required to put his signature in the space provided for “Claimants signature” on the reverse of the refund order. The responsibility of the collecting bank in dealing with “account payee” instruments is well-defined under the Negotiable Instruments Act. No specific purpose is served by obtaining this additional discharge on the reverse of this cheque. On the other hand, it sometimes happens that in the absence of the discharge of the payee, the refund order is returned unpaid, entailing additional workload on the part of the banks.
2. The Board has, therefore, decided to do away with the discharge of the payee on the reverse of the account payee Income-tax Refund Order as it does not serve any specific purpose. This relaxation will be applicable only where the Income-tax Refund Orders are issued in the form of a cheque after introduction of the Magnetic Ink Character Recognition (MICR) Technology for mechanised processing of cheques for clearance (which is presently prevalent in the four metropolitan cities of Calcutta, Chennai, Delhi and Mumbai). However, in case where Refund Orders are issued in the old conventional form, prevailing system of discharge of payee will continue.
