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| « E- filing made mandatory for companies... | Home loan the best way to save tax... » |
IT fails to click with tax dept |
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| September, 18th 2006 |
| The Income-Tax departments flagship IT project for a nationwide network to streamline data collection, compliance and surveillance has virtually come to a halt. Its almost 14 years after the project was kicked off and the government has already spent a cool Rs 100 crore, but no one in the department knows about its progress or how long it will take to get the system up and running.
Officials say that apart from the usual problems associated with government departments such as a lack of vision and procedural delays, a clash of interest at the top level has also come in the way of the project.
The front-end computerisation project kick-started in 1993 was aimed at making available the complete data on taxpayers financial transactions at the click of a mouse. Such an online interface would have helped the government in checking revenue leaks.
In the initial stages, leading Indian IT companies as well as Revenue Canada, a government agency, were involved in the project. The Canadian agency made some progress in the initial stages, but couldnt proceed further. Experts say it is not very difficult for an IT-savvy country like India to implement the project on its own.
KVM Pai, who retired in 01 as the chief commissioner of income-tax in Mumbai says that an online interface is critical to the financial health of the country. He says only 25% of the income are usually reported to the I-T department, adding that in the case of corporates the figure could be much less.
Officials at the I-T department also say an effective networking system comprising regulatory agencies such as RBI and Sebi as well as market intermediaries like stock and commodity exchanges will go a long way in checking tax evasion.
For instance, the Bombay Stock Exchange, which has a network containing loads of information, could share all its data with the I-T department, if the two are networked. The officials point out that the tax compliance rate in India is very low compared to developed countries and this ratio could go up considerably once computerisation is complete.
According to A Balasubramanian, former chairman of CBDT, what is lacking in India is the will to implement such key tasks. We have the know-how and the money required to do this. But the will is lacking.
Mr Pai goes one step further. He believes that the reluctance on the part of the authorities could be attributed to the fact that such a system could jeopardise their designs.
According to him, that is the reason why in India you need a Supreme Court to direct Mulayam Singh Yadav to file his returns, whereas the Internal Revenue Service in the US could easily estimate the total assets of Opus Dei, the parallel Christian organisation featured in Dan Browns best-seller Da Vinci Code, in no time.
Tax practitioners say that the IRS in the US network is so efficient that not a single transaction escapes the eye of the taxman. Mumbai-based chartered accountant TP Ostwal says, with the knowledge available in India, we should surpass the competence of the IRS.
The programme, MCA 21 (the office automation project implemented by the Department of Company Affairs), testifies the quality of the technical know-how we have, he adds.
So, when will the I-T department have a full-fledged network under which tax evasion will be almost impossible. No one in the department is forthcoming on the issue. The only response is computerisation is on and it is an ongoing process.
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