Refund cheques will not be sent out beginning next year until the assessee submits his bank account number and branch code, revenue department sources said. Income tax assessees are required to submit their bank details in the tax return form.

This is being done to prevent fraudsters from encashing such cheques by opening a false account. The proposal will also reduce burden on the banks of physically verifying the cheque presented for payment with the advice note issued by the tax department.

Since the cheques have three months validity, the RBI branch or designated SBI branch would have to retain advice notes issued till the cheques are presented.

The bank details, like in dividend cheques issued by companies, will work as a security feature as the account holder alone would be able to encash the pay order. "Eventually, we want to move towards electronic clearing of refunds," the department sources said.

 That would anyway require the assessee to declare his bank account details such as bank name, address of branch and account number as well as mandate the tax department to make such transfer.

At present, electronic clearing scheme (ECS) transfer is an option available to salaried tax payers in a dozen cities including Delhi, Mumbai, Chennai, Ahmedabad, Bangalore and Hyderabad. However, only claims that are below Rs 25,000 can be refunded through electronic clearing at present.

The tax department has also decided that where the salaried assessee leaves the ECS mandate column in the tax return form blank, the refund would be made through electronic transfer.

Only in cases where the income tax assessee specifically states that he does not want an ECS transfer-refusing the mandate to the tax department would the refund be made by a cheque.