To speed up refunds and encourage electronic filing of tax returns, the Central Board of Direct Taxes has promised expeditious refunds.

As on December 31, 2010, there were about 40 lakh refund cases pending with the tax department. Last year, a Comptroller and Auditor General report had highlighted that it takes as much as 10 months for a taxpayer to get his refund.

"The whole idea is that small taxpayers should not face any hardship in his interface with the department," Chandra added. Though the e-filing of tax returns is rising in absolute terms every year, its level has stagnated at about a quater of the total retuns filed.

"E-filing ensures that tax payers' information on income, taxes and refunds are uploaded in the tax system instantly and tax computations are processed on a real-time basis," said Vikas Vasal, executive director, KPMG.

"A refund banker scheme is already in place in the whole of country to ensure that taxpayers get refunds well in time," said an income-tax department official.

"We issued the highest-ever refunds in 2010-11," says Chandra, who had instructed his officials to clear all pending refunds before March 31.

This will also help the department begin with a clean slate when the new direct tax code comes into effect from the next financial year.

Such tax-payers will not be required to file return even if they have small interest income. "Any step to help tax-payers would help increase compliance levels," he said.

E-filing, which was formally launched on October 13, 2006, is mandatory for companies but remains optional for individuals.