REASONS FOR RESTRUCTURING OF I.T. DEPARTMENT

The process of tax reforms initiated in early nineties brought about extensive changes in all major taxes levied by the Central Government. The impact of these changes was dramatic in the case of Direct taxes. As a result of these changes, the share of Direct taxes in gross revenues of Central Government rose steeply from 18% in 1990-91 to 29% in 1997-98. The share of Direct taxes to GDP also rose significantly from 2.1% to 3.4% during the same period. The collections also recorded phenomenal growth. Today, Direct taxes collections are over 55,000 crores as against only 10,000crores in the early nineties.

The number of taxpayers also have increased from 80 lacs in the early nineties to about 50 lacs today.

The far-reaching changes led to exponential increase in the volume of work hitherto handled by the Department. This created certain problems in key areas of the functioning of the Department. Some of these pressing problems were:

  ---

Mounting arrears of work: Pendency of I. T assessments from 14 1acs in 1986-87 to 98 1acs in 1998-99 .

  ---

Increasing number of stop filers: From I5 lacs in 1986-87 to 72 lacs in 1999 -00

  ---

Increase in delinquent taxpayers: Arrears of taxes from 3475 crores in 1986-87 to 44,140 crores in 1998-99.

  ---

Unwieldy span of control: Taxpayers per CIT have increased from 84000 in 1997 to 1,65,000 as on 31.3.2000.

  ---

Increase in interest payment for delayed refund: Average delay in issue of refund has increased from eight months in I997 -98 to over one year as on today.

  ---

Inoperative manual system

  ---

Poor career management and promotion prospects resulting in demoralisation.

The complexity and magnitude of the above problems are obvious. The Restructuring proposal is an attempt to address these problems by trying to improve efficiency and effectiveness of direct tax administration through induction of technology

Strategy

The Proposal

Three separate functional units at Range level: -

Assessment Unit: The Assessment Unit would be divided into Circle & Wards. The Circle would be headed by DCIT / ACIT and the Wards by the Income tax Officers. They will all be directly accountable to the Additional CIT /Jt. CIT of the Range.

These Officers would exclusively do assessments only and would not be required to perform the functions of Collection,Recovery and Refund of taxes. The assignmcnt of the jurisdictions betwcen DCIT / ACIT and ITO would be based on the investigation, potential of cases reflected by the investigation score assigned to the case. Till this is feasible, DCIT/ACIT would be assigned search & seizure cases and other bigger, complicated cases of the Range.

Collection Unit- The Collection Unit would be headed by a TRO, who along with the complement of staff, would perform the functions of collection, recovery, refund of taxes, monitoring TDS collections and issuance of clearance certificates. The
Additional CIT /Jt. CIT of the Range would concurrently exercise the power of TRO and he would be responsible for issuing certificates u/ s. 195 of the I. T .Act.

Record Keeping Unit: -The Record Keeping Units would comprise a centralized record room where all the record of the range would be stored/arranged according to their PAN. These Units will be managed by OS,TA and Record Assistants.
The Unit will be responsible for identifying the stop filers. Thc Additional/Jt. ClT of the Range would be responsible for issuing notices to the stop filers for filing their tax returns.

Once the tax returns are filed, it will be dealt with by the Assessment Unit for further necessary actions.

The Commissioners of Income Tax will be assisted by a DCIT and an ITO to perform the staff functions of a Commissionerate. They will be designated as DCIT (Hq.) and ITO, (Technical) and will perform the functions relating to legal personnel management, tax payer information and assistance, management control and general.
services.

Officer and Staff Strength of a ModeI Commissionerate

Income Tax Officer

Audit-In the new computerised scenario there would not be any scope for mistakes except those relating to legal interpretations. These would also be minimized on account of  closer supervision by the Addl. Joint Commissioner of Income Tax.Hence, the separate  internal audit units are proposed to be abolished. However the internal audit functions would performed on a 'chain' basis.For example the audit of range I would performed by officers of Range-II, that of Range-Il by Range-llI and so on. Under the new structure, 4500 officers in the Ranges across the country would also perform the audit function along with their other functions.

ITAT - At present there are 38 benches of the Income Tax Appellate Tribunal spread all over the country. The Department will henceforth be represented by one Commissioner and two additional/Joint Commissioner for each bench.

Rightsizing of workload

Induction of Technology