The Union Cabinet has sanctioned an amount to the tune of Rs 4243 crore to build a state-of-the-art Income Tax (IT) return filing system that will reduce the IT return turnaround time. The return process, which currently takes a dreary average of 63 days, is expected to be handled within a single day after this system upgrade! For this, the Union Cabinet has enlisted the services of Infosys, who will help deliver the same in time for the IT season of 2020.
Details of the new project
The Integrated E-filing and Centralised Processing Centre 2.0 project of the Income Tax department of the government will be executed by Infosys over the next 18 months, according to an announcement made by Railway Minister Piyush Goyal. However, sources have revealed that they are targeting its implementation within 15 months, right in time for filing returns in 2020.
In fact, some of the reforms may be implemented within the current system itself. This is being referred to as the Centralised Processing Centre Income Tax Returns 1.0 project. For this, the cabinet has sanctioned an additional consolidated amount of Rs 1482.44 crore.
Infosys was chosen as a service provider by the Union Cabinet chaired by Prime Minister Narendra Modi. The launch is expected to happen following a testing period of three months.
How will the new mechanism work
In the new, end-to-end automated mechanism, the taxpayer will receive a pre-filled form which will contain details like their name, Permanent Account Number (PAN), salary details, income from interest, and tax deducted at source. The taxpayer will have to add details regarding any other income that has not been reported. This is expected to help improve accuracy in the return filing step.
In the new system, which will be implemented in 2020, the government will no longer be managing the process. Instead, it will be done by Infosys, who is the service provider. According to reports by TOI, the government is building an incentive into the system for the service provider to process faster returns. The system will also penalise returns taking longer than 30 days.
The new project also includes integrated contact centres and helplines to help resolve issues, an employer/partner accreditation programme for improved service delivery, and other process automations to encourage voluntary tax compliance.
What are the benefits
According to an official statement, the three broad objectives of this overhaul are faster and accurate outcomes for taxpayers, improved user experience at all stages of the IT returns process, and increased taxpayer awareness through continuous engagement. Moreover, it will promote voluntary tax compliance and managing outstanding demand in a smoother manner.
The statement went on to say that the new process will also ‘ensure transparency and accountability by providing processing status updates and speedy communication using mobile app, email, SMS, and the department website. The revamp will also ensure adherence to international best practices and standards prescribed for ISO certification.
The new system will also ensure fairness in tax treatment to every taxpayer regardless of the amount paid or their status. On this aspect, the statement said that, “the decision will ensure horizontal equity by processing returns filed by all categories of taxpayers across the country in a consistent, uniform, rule driven, identity-blind manner.”
Neeru Ahuja, partner at consulting firm Deloitte India, lauded the initiative, while adding that, “the real success of this (initiative) will be measured when the technologies and tools become easy to use for a common man or woman and technology changes are accompanied by changes in the mindset and culture of the tax authorities at the operational levels.”
Other tax reforms
Following the GST rollout and IT return system overhaul, the next awaited tax reform from the Narendra Modi government is the new direct tax law. The dedicated task force, which was set up for it in November 2017, is expected to submit its report by the end of February 2019. The direct tax reform is expected to curb litigation and avoid tax-induced distortions in investment decisions.
In a similar exercise, albeit for filing GST returns by traders, the Goods and Services Tax Network directed Infosys to design new forms for its users. The announcement was made by the chairman of the Group of Minsters, Sushil Kumar Modi, in September 2018. The new, simplified GST forms are expected to be implemented by March 2019. A standardised accounting software is being developed for the same, to ensure uniformity in filing GST returns.
Tejaswi Subramanian is a senior-sub editor at Qrius.
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