An online tax accounting system for paying taxes will be flagged off on Tuesday, as part of reforms to make the procedures simpler and faster.

The new online system would simplify the procedure of tax payment and ensure that taxpayers get fast and accurate credit for their tax payments, an official release said.

It would also enable the Income Tax department to monitor tax collections on a day-to-day basis, it said.

The tax payments from banks will reach the Tax Information Network of the government in two days instead of the present system taking over 15 days.

The I-T department will introduce online tax accounting of tax payments being collected by the Reserve Bank of India and 31 commercial banks throughout the country from June 1.

The new system will simplify procedures by reducing the number of challans to three from the present seven required for paying tax through banks.

Taxpayers will have to fill a single copy tax challan instead of four at present and it would be identifiable by a unique Challan Identification Number as also the Permanent Account Number or Tax Deduction Account Number.

Banks would enter the data from the main copy of the challan and transmit it online to the I-T department's TIN.

Taxpayers need not have to enclose copy of the challans with their returns as the challans would be dematerialised. Instead, they will just have to mention the Challan Identification Number.

Tax authorities will verify claims for credit with the information available from TIN.