The income-tax department has had a chequered history in the use of IT. Being one of the first users from the government, they faced various challenges.
IT usage got a boost as a result of the Kelkar Committee recommendations with the setting up of the tax information network (TIN) in an outsourced mode. TIN was a revolutionary concept and for the first time a data base of tax receipts and taxpayer expenditure in various areas, was available in a single data base with the permanent account number as the filter. TIN was outsourced to NSDL and the model worked well with low cost, fast execution and good quality.
Possibly, a large part of the increase in tax collection between fiscal 2004 (Rs 1,15,000 crore) to fiscal 2010 (Rs 3,40,000 crore) could be attributed to TIN. Along with TIN, the banking system also provided an online tax collection system. This eliminated the collection loss and reduced the float in the banking system.
Today, the department has e-filing, a national database of filers and taxpayer payment information system, a reasonably good accounting system, a centralised processing centre (CPC) for assessment that has scaled up in Bangalore and good data centre with two business continuity centres. What is needed to complete the system is upgradation of legacy software and a more effective document management system.
To make full use of IT, there is a need for an intelligent application layer on top of the database, a risk-based system to pick up cases for scrutiny assessments, an effective surveillance architecture to pick up patterns of tax evasion and trained people to use the huge amount of data available for better policing.
Overall the progress is satisfactory and within the next two years the department would have a sophisticated tax management system with all facets in place. However, there is a need for further investment in people to create the cadre to use these facilities for better tax management. Compared to the other revenue departments the income tax department certainly has the edge. Tax payers should this year see the benefits of the CPC in the form of quick refunds and assessments.