What is online Tax Accounting System?
OTAS is an approach that will be used or applied while collecting direct tax from any liable individual, companies, and organization. It helps in collecting information about entities who paid tax and especially who choose to pay their taxes through online mode. Also, has simplified the entire process and made it easier and transparent for income tax department of India.
In 2004, Income tax department introduced OTAS to handle:-
- Auditing in Online tax payment
- Accounting in Online Direct Tax Payment.
- Collection of Direct Tax Online.
- Other respective information and receipt collection of online direct tax payment
What is the working process of Online Tax Accounting System?
Tax department of India uses authentic format for maintaining tax related record. This makes things easier for taxpayers. The associated banks also use to follow the same recording format for collecting tax amount. NSDL provides the file validation utility to keep the process in a structured format. As per the policy, a single copy of challan is used by the taxpayers, specified below according to tax type:-
- INTS 280 challan is used for individual tax payment or corporate tax payment.
- ITNS 281 challan is used for depositing all TDS & TCS
- ITNS 283 challan, to perform a banking transaction
- To pay direct tax, hotel receipt tax, estate duty, expenditure tax, wealth tax, security transaction tax etc fill ITNS 282 challan.
After filing challan, bank collect documents from the customer and give them a CIN number. This number will be identification number of customer. It is a combination of release date, 7 digit bank barcode number and unique 5 digit challan number use to pay tax on that particular day.
Benefits of Online Tax Accounting System
- In comparison to the tradition tax payment system, It makes tax payment so flexible.
- Challan identification number helps in payment validation.
- CIN pay a vital role in case of the tax return.
- In an online system, information collection becomes much easier.
- According to new payment process, one challan will be required