Rapid Systemic Changes-

Challenges before IRS

Presentation in IRS Convention in February 2007 by-

Shri K.M.Nair & Sandip Gargunder guidance of Shri

P.C.Chhotaray

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Rapid Systemic Changes

Rapid systemic changes in near past Reasons for rapid systemic changes Problems faced & reasons for same Expected future systemic changes Challenges before IRS – How to deal

with rapid systemic changes

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Rapid systemic changes in near past

Summary assessment Self assessment in majority cases Self-determination of advance tax by

taxpayers Summary assessment without adjustment Creation of unique identifiers (PAN/ TAN) in

AIS –(Now through NSDL and UTIISL) Creation of RCCs and 60 networked stations Providing computers to all officers Computerised processing (AST/ TAS/ IRLA) Cadre Restructuring

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Rapid systemic changes in near past

OLTAS – Online Tax Accounting System (through NSDL)

Computerised processing of TDS returns (through NSDL)

Collection & processing of CIB/ AIR information (through NSDL)

Online transmission of monthly reports Setting up intermediaries for fling e-

returns (registration through NSDL) Filing of e-returns

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Rapid systemic changes in near past

Scrutiny selection through CASS Centralised processing of returns (DT-

01) Issue of refunds through ECS Refund Banking - Issue of refunds by SBI Filing of returns at Post Offices Setting up Large Taxpayer Units (LTU) Right to Information (RTI) Act

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Reasons for rapid systemic changes Exponential increase in taxpayers Inability to deal with them with old system Increase in expectations of taxpayers Increased awareness of law and rights Rapid technological advances Govt.’s decision for e-governance plan Inability to convince the Government about

increasing strength in certain cadres Inability to deal with changes with in the

Department without technical support Stagnation in cadres leading to restructuring

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Problems faced & reasons for same

Decrease in scrutiny and investigation work – poor quality of work and inability to convince govt. for more scrutiny & investigation

Outsourcing of work to other govt. depts. along with the loss of public interface – inability to show that we are ready for changes, Inability to convince unions about the need for outsourcing within the I.Tax premises

Lack of manpower with proper accounting and legal skills – Defective recruitment & Training

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Problems faced & reasons for same

Inability to fully implement AST & IRLA – Apathy of officers to understand & implement them, inadequate training & technical support, shifting priorities, defects in system design

Improper functioning of OLTAS, TDS – Lack of technical manpower, dismantling of old system without stabilisation of new systems, Incorrect data input and inability to supervise and take corrective measures

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Problems faced & reasons for same

Inadequate response to Public – wrong mindset, poor record keeping, non-availability of credible data in computer systems, no web based systems for allowing taxpayers to track the status of returns, applications etc.

Overburdening AOs – Lack of judicial reference system, Non-availability of model orders on settled issues, system changes in transition leading to inaccurate data, wastage of time in adhoc reports, duplication of efforts because of transition

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Problems faced & reasons for same

Inability to generate credible and timely reports – MIS not functioning, wastage of time in adhoc reports, system not capable of generating reports as per users’ requirement, poor record keeping, inability to move data from manual registers to computerised system

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Expected future systemic changes

Business Process Re-engineering Extension of e-filing Centralised processing of all returns 100% scrutiny selection through CASS 100% Refund Banking and ECS Demat of TDS

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Expected future systemic changes

Separation of processes in back-end and front-end processes (requiring interface with public)

Assessment by specialised units/ teams Investigation by specialised units/

teams Web-based responses and status

inquiries Interactive voice response system

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Challenges before IRS – How to deal with rapid systemic changes Re-look at the cadres – Need for technical

and specialised cadres Re-look at the division of work – whether

based on jurisdiction or functions Identification of core & non-core activities Dialogue with unions to allow outsourcing

of non-core activities with in the I.tax premises so that overall control remains with Dept.

Re-look at recruitment policies – Need for specialised skills

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Challenges before IRS – How to deal with rapid systemic changes

Dialogue with Govt. to show readiness for changes – this will ensure that changes are discussed with IRS before their announcement & implementation

Convincing govt. to go ahead with new changes only when old changes have stabilised

Ensuring that new systems are properly established and stabilised before old systems are dismantled (OLTAS/ Challan)

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Challenges before IRS – How to deal with rapid systemic changes

Implementation of changes only when the same have been tested on pilot basis and all defects have been removed

Ensuring smooth transition from manual system to computerised system by giving proper emphasis on this work and after proper development & testing of software and identification of manual records from which this data will be computerised

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Challenges before IRS – How to deal with rapid systemic changes

Development of MIS system which generates all reports on system and puts an end to adhoc reporting except in individual cases

Development of interactive judicial reference system based on contributions from all officers

Development of system for model orders, best practices and investigation techniques based on contribution from all officers