Prime Minister Narendra Modi on Friday said the Income Tax Department will introduce a system of online scrutiny of returns and modify the performance appraisal pro forma of officials with a view to motivating them to pass correct orders and also check corruption.

Stating that the government is taking several steps to serve honest taxpayers, Prime Minister Narendra Modi said this year that 91 per cent of electronic returns were processed within 90 days as compared to 46 per cent last year.

"I have also instructed that the performance appraisal system for Income-Tax officers be changed. The appraisal should reflect whether or not the officer's orders and assessments have been upheld on appeal. This will deter corruption and also motivate officers to pass correct orders," PM Modi said at the 6th Delhi Economic Conclave here.

The I-T department, he said, will move to a system where not only returns but also scrutiny is done without having to go to the tax office.

"Queries could be raised and answered online or by email. There should be a visible electronic trail of what is pending with whom, where, and for how long. This is being piloted in five big cities," the Prime Minister said.

He said the electronic filing of returns now covers 85 per cent of all tax returns and this year the tax department has introduced e-verification using Aadhaar. Over four million taxpayers made use of this facility.

Earlier, electronic returns had to be followed by a paper verification which used to take weeks to get processed, PM Modi said.

"When fully implemented, these changes, namely online scrutiny, and changes in performance appraisal have transformative potential," he added.

When asked how soon the new appraisal form is expected, Central Board of Direct Taxes (CBDT) Chairperson Anita Kapur said, "This year's review will be based on new pro forma."

She further said the tax department has launched pilot projects for five cities wherein the officers will send questionnaires online and get the response online.