Indian Banks’ Association (IBA) has urged finance ministry to reconsider its order restricting agency-banks, mostly state-owned, from tie-ups with other banks for collection of direct taxes, saying the move has created problems for companies.
CBDT recently asked all the agency banks ‘not to enter’ into any tie-ups with non-agency banks for collection of direct taxes. Any agency-bank entering into such arrangement with non-agency banks for tax collection of entities other than FPIs would be deauthorised, it added.
Agency banks are those lenders which are authorised by the Government to collect taxes. Seeking review of the instructions, the Indian Banks' Association (IBA), in a letter to the Chief Controller of Accounts (CCA), Central Board of Direct Taxes, said existing arrangements have been in place for several years now and have been of ‘immense benefit’ to customers who can use their existing bank accounts towards all their payment obligations including direct tax payments.
The restrictions follow a report of Public Accounts Committee of Parliament in which it expressed concern over practice of some agency banks offering facility of collection of direct taxes to some 'non-agency banks'.