The Union Cabinet on Thursday gave the green signal for a proposal of the Income Tax Department to set up a centralised processing centre for IT returns at Bangalore at a cost of Rs. 255 crore as part of an exercise to quicken the processing of IT returns.

To begin with, the Centre will focus on processing all electronically filed returns from across the country, and paper returns filed in Karnataka. Subsequently, its operations will be expanded gradually to cover paper returns filed in other States also.

Announcing the decision, Union Home Minister and Cabinet spokesperson P. Chidambaram, said that while the officers and staff of the IT Department would manage the workflow of the centre, personnel from a private agency would do the processing.

The aim was to ensure that high skilled manpower of the IT department now deployed for processing the returns was utilised better in terms of pursuing cross verification of actionable information. The department would exercise full control over the process to ensure that the privacy and security of the taxpayers data were not compromised in any manner.

The process of selecting the private agency is now in its final stages. Apart from supplying the manpower for processing the returns, the agency will be responsible for developing software for processing of the returns and tax accounting, and for collection of the returns from the Income Tax offices, scanning data entry and storage of the returns.

Chaired by External Affairs Minister Pranab Mukherjee, in the absence of Prime Minister Manmohan Singh, the Cabinet also approved the introduction of a Bill to amend the Rubber Act, to bring it in tune with changes in the sector.

The Bill will, among other things, amend the definition of small grower. It will now cover only those owners, whose estate did not exceed 10 hectares in area, as against the present limit of 20 hectares.

In addition, it will provide for a single fund, called Rubber Development Fund, in place of the existing general fund and pool fund with effective devices to ensure quicker and smoother flow of money into it.

Further, it will empower the Rubber Board to implement standards for quality, marking, labeling and packing for various marketable forms of rubber, including rubber imported into the country and empower the Central government to grant exemption or reduction of any cess on rubber produced in the country and exported, if it is considered necessary in public interest.

The Bill will enable the Centre to specify zero paise per kg as the rate of cess on natural rubber produced within the country and procured for export by exporters for the period from April 1, 1961 to August 31, 2003 and enable the Board to recover from owners, exporters or manufacturers, with cost of collection and interest, in case of delayed payment of cess. Besides, it will empower the Board to compound any offence punishable under the Act.

The Cabinet also gave its nod for a memorandum of understanding between the Union Ministry of Panchayati Raj and the Ministry of Local Government and Regional Development of Norway to promote transfer of competence between the two countries for strengthening local self governance.