Circular No. 3

941. Facility of payment of direct taxes through all branches of State Bank of India and other authorised banks by cash/cheque/draft

What this is

Circular No. 3 was issued by the Central Board of Direct Taxes on 11 February 1969. Its subject is 941. Facility of payment of direct taxes through all branches of State Bank of India and other authorised banks by cash/cheque/draft.

What it does

Opens payment of direct taxes at every branch of the State Bank of India and other authorised public sector banks where an income-tax office is situated. Until 31 March 1976 collection was mainly through the Reserve Bank of India and some State Bank branches, which meant long journeys for taxpayers. From 1 April 1976 the network was widened at eight metropolitan cities, from 15 November 1976 to another sixty-six cities and towns, and from 1 April 1977 to the remaining two hundred and ninety-six cities and towns with income-tax offices. At those places tax may be paid at any branch of the Reserve Bank of India, the State Bank of India and two or three specified public sector banks, in cash or by cheque or draft drawn on a local bank, while an outstation cheque or draft may be tendered only at those Reserve Bank or State Bank and subsidiary branches that accepted them before 1 April 1976. Where there is no income-tax office, the State Bank or subsidiary branch already doing Government business continues to receive payment, and in Lakshadweep the Syndicate Bank does so from 1 April 1977. Taxpayers must fill the challan completely, giving name and address, assessment year, ward or circle, major classification head and permanent account number, showing tax and surcharge separately where applicable, and take the receipted challan as proof. The earlier facility of handing cheques in at income-tax offices is withdrawn, and a State-wise list of the collecting public sector banks is annexed.

Why it was issued

The small number of collection points had put taxpayers to considerable inconvenience, and the scheme was introduced with the object of greater citizen satisfaction.

Who it reaches

Taxpayers paying advance tax, self-assessment tax and tax deducted at source
Deductors depositing tax through banks
Taxpayers in places without an income-tax office
Taxpayers who had been leaving cheques at income-tax offices

The instrument, as the Board published it

The words below are the department’s own, reproduced from its published text. Where the department’s copy carried a publisher’s notes after the instrument, those are not reproduced.

941. Facility of payment of direct taxes through all branches of State Bank of India and other authorised banks by cash/cheque/draft
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

Name of the State/Union territory in which income-tax office located

Name of public sector bank in addition to the Reserve Bank of India and the State Bank of India, authorised to receive direct taxes

1

2

Andhra Pradesh

State Bank of Hyderabad

Syndicate Bank

Assam (including Union territory of

United Bank of India

Tripura, Nagaland, Meghalaya and

United Commercial Bank

Manipur)

Bihar

Central Bank of India

Punjab National Bank

Punjab National Bank

Delhi

Bank of India

Syndicate Bank

Gujarat :

a. Ahmedabad

Bank of Baroda

Bank of India

b. Other places

Dena Bank

Bank of Baroda

Haryana (including Union territory

Punjab National Bank

Chandigarh)

Central Bank of India

Jammu & Kashmir

Punjab National Bank

United Commercial Bank

Karnataka (including Union territory

of Goa) :

a. Bangalore

Canara Bank

Syndicate Bank

b. Other places

State Bank of Mysore

Canara Bank

Kerala

State Bank of Travancore

Canara Bank

Madhya Pradesh

State Bank of Indore

Central Bank of India

Maharashtra :

a. Bombay

Bank of Baroda

Bank of India

Central Bank of India

b. Other places

Bank of Maharashtra

Bank of India

Orissa

United Commercial Bank

Bank of India

Punjab

Punjab National Bank

State Bank of Patiala

Rajasthan

State Bank of Bikaner and Jaipur

Punjab National Bank

Tamil Nadu (including Union

Indian Bank

Territory of Pondicherry)

Indian Overseas Bank

Uttar Pradesh :

a.

Agra

Aligarh

Hathras

Firozabad

Mathura

Mainpuri

Jhansi

Farrukhabad

Banda

Etah Fatehgarh

Allahabad Bank

Etawah

Punjab National Bank

Meerut

Dehradun

Rishikesh

Saharanpur

Muzaffarnagar

Roorkee

Hapur

Ghaziabad

b.

Kanpur

Punjab National Bank

Fatehpur

Bank of India

Unnao

c.

Other places

Allahabad Bank

Union Bank of India

West Bengal :

Punjab National Bank

a.

Calcutta

United Bank of India

United Commercial Bank

b.

Other places

United Bank of India

United Commercial Bank.

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.

What to watch

An outstation cheque or draft can be tendered only at the limited set of branches that took them before 1 April 1976; tendering one elsewhere gets it refused.
The receipted challan is the taxpayer's proof of payment, and an incomplete challan, particularly one without the permanent account number or the correct head, is what causes the credit to go missing.
The facility of leaving cheques at income-tax offices is withdrawn by this circular.
The text supplied under this entry describes the scheme as it stood from 1 April 1977 and expressly withdraws the 1969 circular of the number this record carries, so the entry and the text speak to different dates.
Direct tax payment now runs largely through electronic channels, so the branch and challan mechanics here describe an earlier system.

Where you meet it

In tracing an old payment that was not credited, where the challan particulars or the receiving branch are in question.

← Circular No. 4 · Circular No. 2 →

A circular binds the department, not you and not a court. The Board issues a circular to its own officers. An assessee may hold the department to a circular that helps him; the department cannot hold an assessee to one that hurts him, and the Tribunal and the courts decide the law for themselves.

Source: the Income Tax Department’s own published text — its page for this instrument.