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Thursday, March 3, 2011

How IT/BPR has revolutionized the Income Tax Dept

The Budget documents give interesting nuggets. And the document on fiscal policy strategy was no exception(available here). There, the use of information technology in the BPR of the IT Dept was explained. I was aware about the drastically improved processing speed of the Dept(assessments finished quickly, appellate tribunals backlog reduced etc) but these points explain why it has happened. The Centralized Return Processing Centre(CPC) at Bangalore now processes 1.5 lakh returns/day(or 5.4 crore returns/yr). By May-11, two more CPCs will be operational in Manesar and Pune, with another planned in Kolkata by 2012.

This automation(mostly of retail individual tax payer returns) applies the retail banking approach(low cost high technology low touch) approach to tax. This Budget will nearly do away with most salaried tax payer returns so the high risk business/professional segment will be focussed on. And this may improve tax compliance, reducing black money in the bargain.

Information flows have been shifted online(e-returns, e-TDS, electronic reporting of high risk transactions) and human interface has been reduced(automated refunds etc). One of our IIM-A professors was associated closely with this project and had shared with us the benefits of this approach.

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