The Central Board of Direct Taxes is working on maintaining an online Tax Deducted at Source account for each taxpayer giving details of all such payments made.

The introduction of a paperless system is aimed at checking fraud or bogus TDS certificates as the data supplied by the taxpayers would be tallied with the information received from the banks (in case of companies) and from the account officers of the government departments (for government employees).

The exercise of tallying the information is being outsourced to the National Securities Depository Ltd.

At present, there are 19 payments, including salary, interest, commission and rent, which fall under the purview of TDS and a certificate (Form 16) is to be attached to the tax returns.

As part of the Tax Information Network, not only will filing of returns become paperless, but individual salaried employees will also be able to view their TDS accounts on the Internet.

Director Income tax (systems) S S Khan said the tax department wanted to do away with paper TDS certificates and the requirement for deductees to enclose these while filing their return. "During the current year, however, the department will allow both paper TDS certificates and the e-TDS," he said.

From this fiscal, quarterly filing of TDS through the electronic mode has been made compulsory for government and corporate deductors. Deductors falling in the non-government and non-corporate category are being allowed to issue paper TDS certificates for deductions up to March 2006.

TDS accounted for nearly 45 per cent of the direct tax collections of Rs 52,000 crore (Rs 520 billion) during 2004-05.