The Hindu : Tax refunds could be quicker

Online edition of India's National Newspaper
Thursday, Feb 20, 2003

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Tax refunds could be quicker

By Alok Mukherjee

NEW DELHI FEB. 19. Along with some tinkering of income tax rates in the coming Union budget, the Finance Minister, Jaswant Singh, will most likely put in place a time-bound system of issue of tax refunds and a hassle-free system for filing of tax returns.

Government sources said that the Minister was "completely focused" on providing the country with a first class tax administration, so much so that he had gone public with the statement that a modern and efficient tax administration would do more to increase the tax-GDP ratio than mere tinkering with tax rates. And in his efforts to put in place a modern tax administration, Mr. Singh will draw heavily from the Kelkar committee's reports on direct and indirect taxes.

A modern system could see the current revenue department being by-passed and some of its activities being given to outside agencies. For instance, processing of returns could go to outside agencies since the current backlog of returns is about Rs. 2.8 crores.

At the same time, putting in place an efficient tax administration would depend largely on the extent of computerisation in the revenue offices. Wherever such systems are in place, the existing practice of manually operated procedures for issue of refunds could be replaced by more efficient information technology-based operations.

Under this system, the Income-Tax department would not be the agency to issue the refund orders since taxpayers had complained that their refunds were held back till a personal appearance was put in. Instead, the department would pass on the data on refunds to designated banks which would be authorised to issue computerised refunds as in the case of dividend and interest warrants issued by companies.

There is expectation that Mr. Singh might announce simplification of procedure for filing of tax "challans". At present, four sets of "challans" have to be filed in designated banks, which issue receipts only after the cheque has been cleared. This necessitates more than one trip to file the "challans".

According to the proposal under consideration, only one "challan" would have to be filed and the banks would issue computerised receipts on the spot. If the cheque bounces, the bank would reverse the receipt and inform the IT department to take follow-up action against the delinquent taxpayer.

A complete overhaul of the tax administration would, however, have to await complete computerisation of the revenue department along with on-line connectivity with banks and other agencies. Pending that, Mr. Singh is expected to announce some simplification measures so that his goal of keeping the taxpaying community happy could make some headway.

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