As tax payers many of us contribute in our country's economic growth by legitimately filing our Income-Tax return and paying tax thereon. But sometimes by the virtue of some provisions in the Income Tax Act and Tax Deducted at Source (TDS), our tax computation reveals that the Income-Tax Department owes us some money in the form of refunds due to excess tax paid or credits availed. We wait until the income tax authorities give us our legitimate amount of refund after having done an assessment thereto; but often we encounter delay in receiving our refund cheque or the amount be credited in our bank account (via the ECS mode). However now, one can soon expect Income-Tax refunds to be settled quickly and in a hassle-free manner, if the Finance Ministry has its way.

It is been proposed to link one's Permanent Account Number (PAN) with the bank account number, just like Aadhaar, is integral to the Income-Tax Department's plans. However, the Reserve Bank of India (RBI) is not comfortable with the idea of making PAN linkage mandatory for electronic transfer of all Income-Tax refunds

"We want to move towards 100% ECS (electronic clearance service). But for that, we will need both the PAN and the bank account number. The system will process the refund only when both the numbers entered by the tax department are correct. At the moment, RBI has some reservations and we are trying to convince them," said a Finance Ministry official.

It is noteworthy that at present Income-Tax refunds are generated in two modes – disbursement of cheque or demand draft and Electronic Clearing Service (ECS). If a tax payer has selected mode of refund as ECS at the time of submission of his tax returns, his/ her bank account is linked (with details such as bank account number, MICR code of bank branch and communication address provided). But if the ECS mode hasn't been selected, cheque or demand draft is issued (for which correct address is mandatory). So, e-refunds are not mandatory (i.e. 100%) at present. The refunds are provided through the refund banker scheme, launched in 2007, to non-corporate taxpayers assessed all over India; and the refund banker to the I-T department is State Bank of India (SBI).

We are of the view that, such a system would certainly facilitate quick settlement of Income-Tax refunds in a hassle-free manner for all; but linkage of PAN to bank account, we think, is also intended to keep a tab on the transactions which an assessee would do via the bank account. So given this possibility, this could also lead to rise of black money in the economy.

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