Plan for 2 more tax return processing hubs hit roadblock

CPCs may not be set up in Manesar & Pune due to logistics and manpower issues

The government might shelve its plans to set up centralised processing centres (CPC) at Manesar and Pune.

The CPCs were planned for digitising paper income tax (I-T) returns. The government is now having second thoughts about the feasibility of the plan due to logistical issues.

"The CPCs were meant for processing of paper returns. But there are some logistical issues, due to which it may not be practical to set up these centres. Returns will have to be physically transported to these CPCs and that may be a tedious task," an official told Business Standard.

Moreover, since more than half (20 million) of the total taxpayers (about 35 million) have switched to filing electronic I-T returns, the finance ministry is not sure of the future of these centres. It is worried that transportation of returns from one place to another would be a costly affair. Manpower issues are also a reason.

"Another issue is that two CPCs may not be enough to cover the entire length and breadth of the country," said the official. "If you plan to have more than two, then where should they come up? In a small city, you may have problems with information technology, connectivity, infrastructure and resources."

Currently, there is a CPC in Bangalore for processing e-returns and one in Ghaziabad for processing tax deducted at source (TDS) filings. In Budget 2011-12, the then finance minister Pranab Mukherjee had announced two more CPCs would come up at Manesar and Pune by May 2011, and a fourth CPC at Kolkata in 2011-12.

In 2011, the government initiated the process by inviting bids for setting up the CPCs, but did not get any bids. In Budget 2013-13, it said the delay in setting up of CPCs at these places was on account of fulfillment of required procedures. The tendering for the Kolkata CPC could be initiated only after completion of the Pune and Manesar tendering processes, said the government.

The finance ministry was expecting that operationalisation of these CPCs would help in processing of returns on income within four month of filing. However, now it is looking at encouraging taxpayers to e-file returns. Last year, about 16.4 million returns were filed electronically. The CPC in Bangalore had increased its daily processing capacity from 20,000 to over 150,000 returns.

The government is planning to make electronic filing of returns mandatory for those with taxable income above Rs 5 lakh, against Rs 10 lakh now. The finance ministry is also making provisions for e-filing of wealth tax returns. Besides, e-payment facility would be extended through more banks and the refund banker system would be extended to refunds of more than Rs 50,000.

E-filing will also enable faster processing of refunds. As 80 per cent of the taxpayers who were not mandated to file e-returns were already doing so, the finance ministry thought of making it compulsory to include others in the category, said officials.