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.