The income tax department is planning to withdraw a facility introduced last year for filing tax returns at around 2,000 post offices, owing to incomplete and inaccurate returns. Nearly 350,000 returns were filed through post offices last year.

"Many returns did not even contain the permanent account number and circle name and had a branch code number instead of the bank's MICR (magnetic ink character recognition) code," said a revenue department official, confirming the move.

This has meant virtually none of the 350,000 returns could be processed. "Though the department tried, it could not process the returns. The lack of exposure of post office staff to spot inaccuracies meant they could not reject the returns," the official added.

"We are in discussion with the income tax department (on the issue). But no decision has been taken so far," a postal department official said, when contacted.

According to the income tax official, however, the income tax department is awaiting clearance from higher authorities since the decision involves another government department and public interest.

With the July 31 deadline approaching for filing returns by salaried individuals, the self-employed, small enterprises with a turnover of less than Rs 40 lakh (Rs 4 million) and professionals with receipts of less than Rs 10 lakh (Rs 1 million) a year, the withdrawal of the post office filing facility may result in large queues in front of income tax offices and special counters.

About 12.6 million returns were received up to July 31 in 2006, an increase of 37 per cent over the same period in 2005. Some 1.8-2 million more returns are expected to be filed this year.

Meanwhile, the income tax department will soon extend the refund banker scheme beyond Delhi and Patna to Mumbai, Chennai and Bangalore.