Taxman May Soon Allow You To Pay Income Tax Using Credit Card, UPI


The government may soon allow you to pay your taxes through a credit card, Unified Payments Interface (UPI) or even through a prepaid wallet, according to a government official.

The government is considering more digital modes of payments for making income tax payments apart from debit cards and bank account transfers that are used currently, the official told BloombergQuint on condition of anonymity.

The idea is being considered to simplify payment of income tax, and push use of technology for providing better services to taxpayers, the official quoted earlier said. An email sent to a spokesperson of the Central Board of Direct Taxes remained unanswered.

The option of paying income tax through credit card is available to individual taxpayers in some of the developed countries, said Amarpal S Chadha, partner at EY India. “Given the journey of digitalisation of tax administration in India, extending the option of using credit card for online payment of taxes, without additional charges, would definitely enhance the taxpayer experience and convenience.”

Countries like the U.K., Canada, China, among others allow payment of taxes using a credit card. Canada had started a pilot project in 2017, allowing taxpayers to make tax payments using personalised quick response (QR) codes that are scanned at the time of payment, according to Organization for Economic Cooperation and Development’s Tax Administration 2019 report. By leveraging this third-party service, Canada was able to provide more choices to its citizens who had limited access to internet, and those who did not live in close proximity to a financial institution, the report had said.

If the government includes more modes of payment of tax, it will significantly give a push to compliance and facilitate hassle free payment of tax, said SP Singh, a former Indian Revenue Services officer.

The government is taking several measures to make income tax services simpler and convenient for taxpayers. The income tax department has been active on social media and has started addressing taxpayer grievances on Twitter.

Tax payments constitute one of the important interactions between taxpayers and tax administrations, according to a report of Tax Administration Reform Commission submitted to the government in 2014.

Many tax administrations are increasingly providing electronic payment facilities for all types of tax payments for both individuals and businesses to make the payment experience easier and less costly, the report had said.

It is stated that costs involved in providing tax payment facilities reduce significantly when these are made fully electronic, it said.


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