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Income Tax to make staff's work less taxing
March, 14th 2011

In a bid to reduce the burden on officials, the Income Tax Department is planning to outsource record management to private entities.

Under the proposal, a private party will handle the departments records, including returns and those pertaining to tax disputes.

A senior department official told Business Standard the plan was formulated at a meeting of the Central Board of Direct Taxes on February 18. Action is to be initiated immediately by DG (Logistics), the official said.

He said the work was likely to be handled by either a single company or a consortium. The task of managing tax records through the country would be huge and more than one company might be required, said the official.

It is a good move. The officials should focus on tax collection and avoiding unnecessary litigation, said KPMG Executive Director Vikas Vasal. He said with adequate safeguards, the model should work well and reduce the burden on the tax authorities.

On concerns over the confidentiality of tax records, he said, I dont think its such a big issue. When PAN (permanent account number) work was outsourced, there was a hue and cry, but it has made everybodys life easier.

The main task of the private player will be to maintain records of income tax returns filed manually and management of records pertaining to scrutiny cases and tax disputes at various levels.

Department officials will oversee the work. A central team will look after the implementation of record management and local teams at different commissionerates will operate at the ground level. It will be an assembly line system, with I-T officials working as the front office, said the department official.

He added the department would ensure secrecy and security of records. There will be segments handling individual work and nobody, apart from the officials, will have full information about a particular tax-payer, he said.

The number of income tax-payers in the country is about 35 million. It is expected to reach around 80 million by 2015. Considering that a substantial number of tax-payers file returns manually, managing records has become a major task for the department.

The department says it requires about 12,000 officials just for scrutiny cases. At present, around 4,000 offcials are handling 7,00,000 scrutiny cases a year.

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