INCREASE IN THE COST OF INCOME TAX DEPARTMENT IN FY 2020-21; REVEALED RTI APPLICATION

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INCREASE IN THE COST OF INCOME TAX DEPARTMENT IN FY 2020-21; REVEALED RTI APPLICATION

 

As new and new technology is emerging, every field and department is moving from manual to automated and digital procedure which is expected to reducemanpower cost as well as faster results. However, this doesn’t look so with the income tax department.

The reply received in response to the RTI application regarding to total cost incurred revealed otherwise.

As per the RTI application the cost of income tax department has increased in the financial year 2020-21 as compared to the financial year 2019-20 by 4%. This has happened despite there being lockdown in year 2020-21.

Though all the activities were not normal during lockdown &majority of the government departments were closed, it was expected that the cost of operating would be reduced.

The cost data of income tax department for previous three years as per RTI application has been given below:

Office of pr.cca, cbdt, lok nayak bhawan, khan market, new delhi.
Direct taxes
 
Revenue section (in thousand of rs.)
Revenue section FY 2018-19 (expr.) FY 2019-20 FY 2020-21
Revenue section
1 Salaries 39464346 42703317 43418172
2 Wages 555663 611407 658049
3 Ota 1224 697 593
6 Medical 434212 394772 409446
11 D. T. E. 877020 818159 510354
12 Foreign travel 10754 11711 975
13 Office expenses 0 0 0
O.e. (charged) 0 0 0
O.e. (voted) 11518257 11733760 11344817
14 Rent, rates & taxes 5488106 4772333 5938153
16 Publications 20136 27653 20042
20 Other admn expn 476123 451457 242830
26 Advt & publicity 1396919 573412 349790
27 Minor works 480679 509774 607161
28 Professional srv 963835 899161 966223
32 Contributions 4694 6541 1828
41 Sect srv exp 231399 272893 281920
50 Other charges 16434 30831 36900
96 Swachhta actionplan 138320 194245 204711
99 Information tech. 8680778 5541684 7307286
Total 70758899 69553807 72299250

The analysis of above shows the following facts:

  1. The salary expense is more than 50% contribution in the cost, and this percentage has been increasing in the past three years. The salary percentage was 56% in 2018-19, but now in 2020-21 the percentage is 60%. With the launch of various faceless schemes like face less penalty, faceless assessment, faceless appeal scheme, etc. , it was further expected that the expenses would witness a reverse trend. With digitalization the man power requirement would have reduced and so should the salary, but the expense increased.
  2. Also the rent rates and taxes expense percentage has been increasing since three years despite digitalization. As more and more work is being automated the requirement of offices in local places has vanished and hence the rent expense should have gone.
  3. As a percentage to total expenditure, the expenses on information tech expense has not risen but has witness the reduction in it outgo.

In our view, if department starts taking efforts and work efficiently various cost can be reduced. In the next few years for the following reasons:

  1. The requirement of staff is going to reduce as with automation the manpower that was earlier required for all the administrative work won’t be needed anymore.
  2. Rental expenses may reduce as the offices in local area which are not required can be closed.
  3. IT System cost will also decrease as the cost of setting IT system has been incurred initially and the benefit will last for many years. So less amount of expense will be required in upcoming year.Updation expenses may not be much as compared to one time capital expenditure.
  4. Other administrative expenses can also be reduced by eliminating unnecessary staff, by adopting work from home, system driven working, etc.

Suggestion:

Outsource of activities:
 One of the measure to reduce cost of operation can be outsourcing.

Outsourcing of various taskwill help in eliminating high cost staff, leading to reduction in employee cost and various other office expenses. Department may outsource the task of partial assessment to other chartered accountants, which may  help department reduce the salary cost of assessing officer.

Work from home:

work from home system can be adopted which will reduce various element of employee cost, for example, travelling allowance, conveyance allowance, etc. Even the rental expense reduce as even small offices will be sufficient for operating department work.

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