Must be part of functional IT.
The income tax department's move to allot a unique document identification number (DIN) to taxpayers is an incremental, yet welcome, step to improve transparency in the tax system.
Taxpayers, who have to compulsorily quote DIN in every notice, order, or any letter with the department, will find it easier to track their correspondence.
There is a deluge of applications from taxpayers to expedite refunds or even to correct computation errors in IT returns.
DIN will generate an audit trail and ensure that such applications do not go missing, making the department more accountable.
However, the use of information technology to generate one more unique identifier, like the permanent account number (PAN), makes sense only if it helps improve taxpayer services.
The department must have a clean system on tax deducted at source and issue prompt and automatic refunds.
That is not the case today, despite the tax department being among the first users of information technology.
Sure, the administrative ease of filing tax returns has improved with e-filing and a centralised processing centre has been scaled up in Bangalore to assess these returns.
Yet, the department is found wanting in managing the huge database on taxpayers.
The tax information network (TIN), which captures data on tax receipts and tax expenditure in various areas with the PAN as a filter, has been in place for over five years.
But in several cases, transactions of taxpayers cannot be matched with their tax returns as PAN is yet to be made fully foolproof.
So, a unique transaction number for every transaction on tax deducted at source makes sense, especially in cases where PAN is missing.
Once PAN is made foolproof, the department will be able to collate data on large financial transactions and identify those who ought to pay tax, irrespective of the returns filed.
The unique identity number will further strengthen the audit.
Only a robust and secure information technology (IT) infrastructure will ensure an effective tax administration and financial governance system.
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