PC turns to IT to double tax base

Manju Menon & Namrata Singh / TNN / Mar 26, 2006, 22:46 IST

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At its core is a massive IT strategy that promises to shake up the fundamentals of the income-tax system in the country.

MUMBAI: For a country with a population of a hundred crore plus, India has only 4.26 crore taxpayers.
There��s every chance that you��ve heard successive finance ministers lament about this deplorable piece of statistic in their budget speech. This year, however, the FM could spell out a big, hairy, audacious goal-of doubling the taxpayer base by 2010-11.
It��s no sleight of hand.At its core, is a massive IT networking strategy that promises to shake up the fundamentals of the income-tax system in the country.
Using the power of technology, the taxman will be able to instantly track every transaction we make-be it buying a house, flashing the plastic to buy jewellery or withdrawing money from the bank-at a click of a button. More on it in a bit.

But here��s the upshot: if the I-T department is able to ferret out defaulters and potential tax payers, it could give the finance minister the flexibility to lower tax rates and further push up compliance.
The effects of this virtuous circle are already beginning to trickle in. This year, the I-T department had targeted to increase permanent account number (PAN) allotments by 20%. They look all set to do so. In fact, till 2010, the plan is to continue growing the tax base by 20% every year. And much of it is thanks to the new IT system that��s likely to be entirely in place by 2008.

The change will begin at the grassroots. Remember the last time you had to scramble to file your incometax returns within the stipulated deadline? The chances are you��d probably had a hard time even locating the I-T office where your return would be accepted.
And even if you did, you��d probably had to deal with serpentine queues.
Guess what? By 2008, once the I-T department��s mammoth drive to seamlessly connect all its 510 offices across the country is over, you will be able to file your income-tax returns anywhere in India, instead of being restricted to a specific jurisdiction within a city.
The idea is simple: the department wants to create a single national database. Today, all the data that a taxpayer files with the department lies with each of the 510 offices across the country. If an assessee moves to a new city, accessing his records becomes a big hassle for the assessing officer. Unless he repeatedly follows up with the original office, the information is seldom made available.
Currently, the 510 offices are connected to one of the 36 regional computer centres. But the master plan is to directly connect them to the National Data Centre in Delhi. Once this system is networked by June this year, taxpayers will be able to file returns from any office.

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