ART of “e”- LIVING – Part I

We are now living in an “e” - Environment, it is imperative that we should know

the basics of our data flow and how we can give the data in an efficient manner so
as to help the administration to work and serve us better. I am trying to cover the
“e” – era starting from the Online Tax Accounting and Information System. This
article gives a prelude on the aforesaid OLTAS and gives a list of precautions to
be taken on making payment of taxes in to bank.

We will try to achieve our objective by understanding few common terminologies

and their structures.

PAN

Permanent Account Number is a Unique Identification number given for all the
Income tax assesses based on certain criteria. The income tax act envisages
certain criterion’s where the persons should get the PAN and TAN numbers.

STRUCTURE

It’s a 10 Digit Alpha Numeric, placed in the following way. This format is
universal and will not change based on any constraints.

 Here Status will be any of the following Highlighted Characters, based on person.

P – Individual H – HUF
C – Company F – Firm
A – Association of Person T – Trust
B – Body of Individuals L – Local Authority
J - Artificial Judicial Person
 The “Check Digit” is a Unique Alphabet allotted for a given combination of
Alpha numeric. It is basically a checksum used to mainly detect errors. It is
important to verify whether correct PAN / TAN is provided

TAN

Tax Deduction & Collection Account Number is a Unique Identification number for
the Person’s who are required to Deduct Tax at Source.

STRUCTURE

It is also a 10 Digit Alpha Numeric placed in the below mentioned sequence.

The basic understanding of the structure of the PAN / TAN is required because a
large number of errors that are common represent placing an alphabet instead number
and vice versa. This understanding helps in knowing and validating the given PAN or
TAN at our end and at least detect and correct errors instead of quoting a wrong one.

OLTAS

OLTAS is an online system of accounting for taxes paid. The government developed
this model by creating a Tax Information Network (TIN), which will enable the
collection of all information’s related to tax at a single place.

The unique feature on OLTAS is that tax payers are identified only by PAN / TAN
numbers based on the type of payment. There are various simplification procedure
introduced by OLTAS, some of them are listed below.

 Bringing down the number of Challan types & copies for payment of tax
to one.

 Outsourcing of the work of processing TAN, PAN Applications and TDS

Returns to NSDL and UTISL.
  Facilitates the online filing of returns, payment of taxes etc.,

The Basic doubts on how our tax related information flow from the start i.e., from
us to the Banker till it reaches the Income tax Department will be clarified by the
following flow diagram.

DATA FLOW FROM OUR END TO INCOME TAX OFFICER END

THIN RED LINE !!

AABPB1234B

NSDL
BANK

Processing of TAX Segregation of Data

paid information
Assessee
ITNS 280/281/282/283
Acknowledgement

National Computer Centre

(Upload in to main Database)

Income Tax Officer

Through the introduction of OLTAS, the basic entry of data is done at bankers
end and the data will directly be posted to the National Computer Centre of
Income tax department through the Intermediary (NSDL).

Whenever information is passed hands, I use to think of the famous

communication game that we use to play at our schools that of passing secret
information through a group of members and at the end the message will be
totally distorted. The similar concept is true as far as the information communiqué
in the “e”- format concerned.

The significance of PAN / TAN and the correct quoting of the same are relevant
in maintaining the data identity and integrity. In the larger context the PAN and
TAN will be the identity for all us in the “E” arena

If we can see in the flow diagram, there exists a “Thin Red LINE” covering all the
levels in the flow, which represents nothing but our PAN / TAN numbers. It is the
identity factor in each level, though in different contexts. Ultimately the taxes
paid should be credited to our PAN / TAN ledger which is of utmost importance.

What will facilitate the aforesaid ultimatum is a critical question. We can take the
example of the same communiqué game and follow the solution. The crux is to
maintain the data sanctity. If we can make sure that the information provided is
not distorted at our end and also ensuring the correctness of the BSR Code and
Challan Serial Number at the bankers end will allow the smooth flow of
information.

We have to take certain precautions in filling up the PRESSURE points in the

Forms 280 / 281 / 282 / 283 as illustrated in the exhibits. It is a Pressure point
because it is vital for assessee to get correct tax credit and taxman to provide swift
service.

The first simulation helps in identifying PRESSURE points in ITNS 280 which is
used for paying Advance tax, self assessment tax etc., The second one ITNS 281
is used for remitting TDS / TCS. The Pressure points in future relating to online
tax will be more or less same for the “e” world.

We have to know that why these pressure points are so critical, lets see one by
one

1. PAN / TAN – Correct quoting of PAN / TAN is critical because we are

identified based on PAN / TAN if it is wrong then the tax paid will not be
credited to our name.

2. Ticking of Correct Box for identifying our status whether as Individual or

company. Based on this the account code for credit is decided by bank.

3. Enter the correct year for which the tax is paid, if not the tax will be credited
for a wrong year and our status for current year may show zero.

4. Make sure you tick correct box say Advance tax / Self assessment tax or TDS,
TCS etc. This will identify for what we are making payment.

5. Then Importantly the break up of payment into Tax, Surcharge, CESS etc.,
This will help the department to correctly assess how much we paid tax,
surcharge, cess etc.,
 6. The most important part of all the points is making sure that we have the
details such as BSR CODE, date of payment, Challan Serial number. While
receiving the Challan acknowledgement from bank we should have aforesaid
in cleanly identifiable and readable form. Combination of this is called
Challan Identification Number (CIN) based on this the Challan is traced
online and verified whether proper posting is done.

The points 2, 3, 4 and 5 are Important for statistical reasons also. Any wrong
details will give wrong statistics and ultimately a wrong decision making!!

Based on the aforesaid checks we can make sure that our data is accounted
properly. By exercising little care on the aforesaid PRESSURE points, we can
have a smooth data flow, and its traceability. This will help the banker to correctly
post the records to our PAN / TAN ledger. This will avoid unnecessary queue
before the Income Tax Department.

The information “e” age is now growing faster, we as a professionals as to catch

up and give the deliverables. This is a first step towards understanding a good
beginning of information revolution.

B.GANESH
M/S. SEKARAN & VENKATESH
CHARTERED ACCOUNTANTS

End of Part I

See also: Exhibit 1 and 2

 Tick Appropriate BOX
Clearly Enter Enter Correct
Correct Assessment Year for
PAN ex.2006-07

TICK
Correct
BOX

Enter Tax,
Surcharge,
CESS, Make sure it contains
Interest clearly the following
Separately BSR Code, Date,
Serial No.
 Enter Enter Correct
Correct Tick Appropriate BOX Assessment Year for
TAN Clearly ex.2006-07

Enter Tax,
Surcharge,
CESS,
Interest
Separately Make sure it contains
clearly the following
BSR Code, Date,
Serial No.