Published On: Fri, Mar 16th, 2012

RBI’s role as Banker to Indian Government

1. What is RBI’s role with regard to conduct of Government’s banking transaction?

In terms of Section 20 of the RBI Act 1934, RBI has the obligation to undertake the receipts and payments of the Central Government and to carry out the exchange, remittance and other banking operations, including the management of the public debt of the Union. Further, as per Section 21 of the said Act, RBI has the right to transact Government business of the Union in India.

State Government transactions are carried out by RBI in terms of the agreement entered into with the State Governments in terms of section 21 A of the Act. As of now, such agreements exist between RBI and all the State Governments except Government of Sikkim.

2. How does Reserve Bank of India discharge its statutory obligation of being ‘Banker to Government’?

Reserve Bank of India maintains the Principal Accounts of Central as well as State Governments at its Central Accounts Section, Nagpur. It has put in place a well structured arrangement for revenue collection as well as payments on behalf of Government across the country. A network comprising the Public Accounts Departments of RBI and branches of Agency Banks appointed under Section 45 of the RBI Act carry out the Govt. transactions. At present all the public sector banks and three private sector banks viz. ICICI Bank Ltd., HDFC Bank Ltd. and Axis Bank Ltd. act as RBI’s agents. Only authorised branches of Agency banks can conduct Govt. business.

3. How payment into Government account is made?

All monies for credit to Government account like taxes or other remittances can be made by filling the prescribed challans of the Government/Department concerned. These challans along with the requisite amount (by way of cash, cheque or DD) are required to be tendered with the authorised bank branches.

4. When is the receipted challan for payment made into Government Account made available?

The receipted challans in case of cash tender are generally handed over to the remitter immediately across the counter. In case of payments made by cheque/DD, the receipted challan is issued only on realization of the instruments based on the clearing cycle of the local Clearing House. In all such cases, a paper token is issued to the depositor indicating the date on which the receipted challan will be ready for delivery. The receipted challan will have to be collected within 15 days from the date indicated on the paper token by surrendering the paper token.

5. What if the paper token is misplaced / lost?

In case of loss of original token, on a specific request and on payment of prescribed fees, the receipted challan is issued.

6. What if the Receipted Challan is misplaced?

No duplicate challan is issued under any circumstances. Instead, a ‘Certificate of Credit’ is issued on specific request with the requisite particulars and payment of prescribed fee.

7. What is the remedy if the cheque issued by Government is misplaced or lost in transit?

The payee of the cheque has to approach the cheque issuing authority and apply for a duplicate cheque explaining the circumstances under which the original cheque was lost or misplaced. After satisfying himself, the drawer may issue a letter to the payee bank requesting it to record STOP payment against the lost cheque. The bank thereafter checks whether the cheque is already paid. If not paid, it records ‘STOP PAYMENT’ order till the expiry of the validity of the cheque and issues a ‘NON PAYMENT CERTIFICATE’.

8. Are Agency banks compensated for conduct of Central/State Government business?

The accredited banks are paid remuneration by RBI for conduct of State/Central Government transactions. Such remuneration is called Agency Commission. The rates of agency commission applicable at present (from 1.7.2005) are as under:

Receipts : Rs. 45 per transaction


Pension Payments : Rs. 60 per transaction


Payments other than pension : 9 Paise per Rs.100/- turnover

On-line Tax Accounting System (OLTAS) for Direct Taxes

9. What is OLTAS?

It is a system introduced in April, 2004 for collection, accounting and reporting of the receipts and payments of Direct Taxes on-line through a network of bank branches. The tax payers’ data flow from banks directly to Tax Information Network (TIN) maintained by National Securities Depository Ltd.

10. What are the major changes envisaged?

Under OLTAS, only a Single Copy Challan is used with a tear off portion for the Tax Payer. The three new single copy challan in use are as under:

A common single copy Challan No. ITNS 280 for payment of Income Tax on Companies (Corporation Tax) and Income Tax (other than Companies).

Challan No. ITNS 281 for depositing Tax Deducted at Source/Tax collected at source (TDS/TCS). It has two major Heads i.e. (a) 0020 for company deductees and (b) 0021 for non-company deductees.

Challan No. ITNS 282 for payment of Hotel Receipts Tax, Gift-Tax, Estate Duty, Expenditure Tax, Wealth Tax, Securities Transaction Tax and Other miscellaneous direct taxes.

11. Does a tax-payer get his copy of the challan?

No. He only gets the tear-off portion from the challan from the bank after getting it duly stamped by the bank with a unique Challan Identification Number (CIN).

12. What is CIN?

It is Challan Identification Number. It is a unique number containing the following information:

(i)   7 digits BSR Code of the bank branch where tax is deposited
(ii)  Date of presentation of the challan (DD/MM/YY)
(iii) Serial number of Challan in that branch on that day (5 digits)

The CIN has to be quoted in the Income Tax Return as a proof of payment. CIN is also to be quoted in any further enquiry.

13. How to obtain the new Challans?

The Challans are available on the website Challans are also available at the local Income Tax Offices and also with private vendors.

14. What would happen if theacknowledgement counterfoil is misplaced?

Approach the bank where tax was deposited. The branch will issue a certificate after following certain procedures which contains payment particulars including CIN.

15. Can the Tax payer pay Direct/Indirect taxes through internet?

Yes. Most of the banks are providing the facility to their customers.

16. Where can a tax-payer get the detailed procedure on OLTAS?

Please visit

17. What is the new procedure for payment of direct taxes at banks?

The authorised bank branches accept Direct Taxes by cash or cheque/demand draft drawn on the same branch or on other banks/branches with Single Challan. The bank immediately returns the tear off portion of the challan duly stamped with a unique Challan Identification Number (CIN) when the payment is made in cash. In the case of challans presented with cheque/demand draft drawn on other banks/branches, tear-off portion of the challan will be released to the tax-payer only after the realisation of the cheque/demand draft but tax shall be deemed to have been paid on the date of tender.

18. How does the new system benefit the taxpayer?

The new system is of immense benefit to the common taxpayer. Now a single copy simplified Challan has to be filled up replacing the earlier quadruplicate Challan. Secondly, it would be possible to obtain an acknowledgement for taxes paid at your own bank branch immediately. Further, the acknowledgement counterfoil with the rubber stamp containing the Challan Identification Number (CIN) assures that the payment is properly accounted for. The Tax payer can view the details of tax paid by him by logging on to and typing the unique CIN given by the bank. (For more details please visit NSDL Home page Tax-payer is no longer required to attach copies/acknowledgement of challan with the Return. He should only mention the CIN details in the Income-tax Returns.

19. Can the tax-payer still use the old forms?

No. Tax is accepted only with the new prescribed challan forms.

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