This is an attempt to study the Value Added Tax (VAT) policy, organization, functions, functionaries, Governance and E-governance measures, citizens charter, E-services, processes, business intelligence (BI), performance indicators of Commercial Taxes Department of a small federal state/ UT in India, benchmark against progressive states and recommend reforms in policy, organization, people, functions, processes and other areas as mentioned above.
2. VISION STATEMENT
2
A modern tax administration that is
Efficient, Effective and
Equitable, which is conducive to
investment, economic growth and free
flow of goods and services within the
common market of India, with reduction
of tax burden, cost of compliance &
administration and interface paving the
way for expanding tax base and tax
buoyancy through centralized planning &
technology and decentralized
implementation of service delivery
4. TAX GOVERNANCE REFORM
GUIDE4
PRINCIPLES of MODERN TAX
ADMINISTRATION
MODERN TAXPAYER SERVICE STRATEGY
SERVICE ORIENTATION & ENTERPRISE
ARCHITECTURE
AREAS OF BUSINESS PROCESS
REENGINEERING (BPR) & POLICY
RECOMMENDATIONS
8. RETURN
8
ANALYSIS of RETURN
RECOMMENDATIONS
INFORMATION CAPTURE in RETURN &
ANNEXURE
CST RETURN
9. ITC VERIFICATION in INTRA-STATE
TRADE9
BUSINESS ENVIRONMENT in a SMALL
STATE/ UT
CURRENT PRACTICE in VATIS SYSTEM
ITC VERIFICATION
KERALA
ANDHRA PRADESH
TAMIL NADU
KARNATAKA
MAHARASTRA
CONCLUSION from STUDY of other STATEs
BUSINESS INTELLIGENCE (BI) of IT SYSTEM
10. ITC VERIFICATION in INTRA-STATE
TRADE10
MODELS of TAX INFORMATION
COLLECTION
CHARACTERS of a TRANSACTION
INVOICE vs TIN LEVEL CAPTURE
EASE of PROVIDING INFORMATION
ITC CROSS VERIFICATION at TIN LEVEL
RECOMMENDED MODEL-TIN & TAX RATE
INVOICE LEVEL CAPTURE of INTER-
STATE TRANSACTION
11. PAYMENT and RECONCILIATION
CRITICAL ANALYSIS of PAYMENT
CRITICAL ANALYSIS of RETURN PAYMENT
RECOMMENDATIONS
OUTSOURCE CHEQUE/ DD COLLECTION
OUTSOURCE CASH COLLECTION
CRITICAL ANALYSIS of RECONCILIATION
RECOMMENDATIONS
CRITICAL ANALYSIS of TDS PAYMENT
RECOMMENDATIONS
GROUP TDS CERTIFICATE FORM
11
13. BUSINESS
INTELLIGENCE, AUDIT, ENFORCEMENT
13
PARAMETERS for BUSINESS INTELLIGENCE
AUDIT SELECTION PARAMETERS of
MAHARASTRA
COMPARATIVE ANALYSIS OF ENFORCEMENT
RECOMMENDATION on ENFORCEMENT WING
RECOMMENDATION on MOBILE
ENFORCEMENT
CRITICAL ANALYSIS of ASSESSMENT
RECOMMENDATIONS on SETTLEMENT
RECOMMENDATIONS on ASSESSMENT
14. STATUTORY FORM
MANAGEMENT
ANALYSIS of CURRENT SCENARIO
FORM ISSUE by the STATE
SUBMISSION of FORM RECEIVED from OTHER
STATEs
RECOMMENDATIONS
CANCELLATION of E-FORMS
AS-IS
RECOMMENDED to BE
ABOLISH ISSUANCE of FORMS to DEALERS
AS-IS
RECOMMENDED to BE
14
15. TAXPAYER ASSISTANCE &
APPEAL15
Inquiry and Grievance Management
Communication
Front Office
Advance Ruling & Alternate Dispute
Resolution
Appeal
19. PRINCIPLES of MODERN TAX
ADMINISTRATION
19
Self Assessment by Taxpayers
Law is comprehensible by most tax payers
Simple return form to fill in
Simple record keeping
Best knowledge of own business and application of tax laws to
business
Easy computation of tax
Quick refund for access tax paid
Enforcement by Tax Administrations
E-Services, timely advance ruling & dispute resolution
Focus on recalcitrant taxpayers
Stringent penal provisions and reduced discretion
System guided audit selection on transparent parameters
Reduce compliance and administrative cost
Strong MIS support to reduce evasion, fraud & non-compliance and
enhance planning & policy capability
20. MODERN TAXPAYER SERVICE
STRATEGY
20
Understand taxpayer needs
Tailor service delivery to taxpayer needs
Constant quality improvement in service delivery
Use multiple approaches
Transform the mindset and capability of tax
personnel
Measure Performance
Source: Odisha Modernizing Economy Governance & Administration
21. SERVICE ORIENTATION & ENTERPRISE
ARCHITECTURE
21
Enterprise
Architectu
re
Administrati
on
Taxpayer
Functio
n
Process
Technolo
gy
Resour
ce
Modified from OMEGA Report, 2011
22. AREAS OF BPR & POLICY
RECOMMENDATIONS
22
• Registration
• Commodity Classification
• Return
• ITC Verification
• Return Scrutiny
• Payment
• TDS
• Refund
• Accounting &
Reconciliation
• Organization Restructuring
• People Deployment
• Outsourcing
• Inquiry & Grievance Mgt
• Advance Ruling & Appeal
• Performance Indicators
• Best Practice Study
• Business Intelligence
Parameters
• Audit
• Investigation
• Statutory Forms
Management
Audit
Intelligen
ce
Forms
Organizatio
n
Functionari
es
PPP
Grievance
Performanc
e
Registratio
n
Return
Payment
Refund
Accounti
ng
24. Commissioner of Commercial
Taxes
Dy CCT
CTO HQ
AC (A&I)
CTO I CTO
II
CTO
IAC
DCTO
CRU
DCTO
Internal
Audit
CTO
IW
CTO
Mahe
DCTO
Mobile
CTO
Yanam
CTO
Karaikal
Legal
Cell
AAC
(Appeal
)
Finance Department Secretary to the Government
(CT)
Administrativ
e Field
Operatio
n
24
CURRENT ORGANIZATION
STRUCTURE
25. WINGWISE OFFICERS
DEPLOYMENT
Number of Officers
HQ Function Total 8
Administration in Commissionerate 2
Head Quarter Cell 3
Statistics Cell 2
EDP centre 1
Statutory Monitoring of Officers
Action Total 6
Legal Cell 1
Appeal Cell 2
Internal Audit Wing 3
Centralized Field Operation Total 10
Head of Audit & Assessment (A&I) 1
Mobile Wing 3
Registration Wing 2
Intelligence/Enforcement Wing 4
Decentralized Field Operation Total 18
Division I 4
Division II 4
Division IAC 5
Karaikal 2
Mahe 2
Yanam 1
25
26. Data not Complete/ Available for some key functions
Revenue
in Crore
Dealer
strength
Officer
Strength
Region wise
revenue
collection/de
aler in Rs.
Lac
Division
wise
revenue/O
fficer in
crore
Region
wise
dealer
/office
r Works Executed
Outstandi
ng Old
Arrear (Rs.
Crore)
Outstandi
ng Current
Arrear (Rs.
Crore)
Pending
Appeal
&
Revisio
n Cases
Division I 253 4 63.25
Return, Payment, Scrutiny,
Assessment, Forms, Arrear etc 57.35 4.64
Division II 222 4 55.50
Return, Payment, Scrutiny,
Assessment, Forms, Arrear etc 73.54 24.21
Division IAC 258 5 51.60
Return, Payment, Scrutiny,
Assessment, Forms, Arrear etc 5.92 0
Division IW 94 4 23.50
Return, Payment, Scrutiny,
Assessment, Forms, Arrear etc.
Enforcement for entire UT 20.9 2.49
Total (Capital) 827 10033 17 8.24 48.65 590 157.71 31.34
Division City 2 69 1934 2 3.57 34.50 967
Registration, Return, Payment,
Scrutiny, Assessment, Forms,
Arrear etc 3.41 0
Division City 3 78 653 2 11.94 39.00 327
Registration, Return, Payment,
Scrutiny, Assessment, Forms,
Arrear etc 20.54 0.01
Division City 4 34 524 1 6.49 34.00 524
Registration, Return, Payment,
Scrutiny, Assessment, Forms,
Arrear etc 0.55 0
Total (State) 1008 13144 22 7.67 45.82 597 182.2 31.35
26
DIVISION COMPARISON 2011-12
27. CRITICAL ANALYSIS of FUNCTIONS &
FUNCTIONARIES
• Empirical data is not comprehensive and conclusive for
planning redeployment
• Officers belong to Commercial Tax Cadre
• Long Hierarchy of Officers
• Clerks are transferable to other Depts.-institutional memory
lies with Officers
• Role of Officers in HQ Cell, Statistics Cell, Internal Audit not
clear
• Enforcement work of Mobile Wing & Intelligence Wing (IW) not
visible
• IW conducting Assessment- is against natural law of Justice
• Industrial Assessment Circle (IAC) is not specialized
• More Officers in HQ/ Non-Statutory Functions
• More Clerks in Statutory Functions in field
27
28. BASIS of PROPOSED
RESTRUCTURING
Revenue targets to be complimented by performance efficiency
and effectiveness of functions
Separation of operations design from operations delivery
• Business process re-engineering recommendations require less
clerks in filed operations
• Can outsource, but can’t increase manpower, Vacancy (30%)
shall be filled up immediately-No point creating new post, when
vacancy is so high
• Reduce dealer/officer ratio-More officers in field operation
• Centralized E-Services require less interface, hence
• More large tax paying dealers from entire state brought under LTU
and IAC located centrally at state capital
• Develop functional specialization
• Reduce pressure on CTD offices in periphery
• Enforcement activity by one independent centralized wing
• More division required to absorb dealers withdrawn from IAC and
IW
28
29. PROPOSED ORGANIZATION
STRUCTURE
Commissioner
of Commercial
Taxes
Addl CCT
Admini
stratio
n
Internal
Audit
Legal
Cell
Business
Intelligenc
e
DCCT (A)
ACCT IAC
ACCT (RC)
ACCT (LTU)
Territorial Assessment
Divisions (7)
DCCT (I) DCCT
(Appeal)
Finance Department Secretary to the Government (CT)
Administrative
Field
Operation
PROPOSED ORGANIZATION CHART
29
30. COMMISSIONERATE
Proposed Administrative set up in Commissionerate
Commissioner
Addl CCT
Computerizat
ion/ MIS/
Statistics Cell
Programmer
Data
Processing
Operator (3)
HQ
Administrat
ion
Superinten
dent
Staff (5)
Internal
Audit Cell
ACCT (3)
Staff (3)
Business
Intelligence
Unit
ACCT (1)
Staff (1)
Legal
Cell
Un Secy
Staff (1)
Grievanc
e
Superint
endent
Staff (2)
Staff (1)
Staff (1)
30
34. UPGRADATION/ REDESIGNATION
Sl No Position in CTD Present Proposed
1 Head Deputy Commissioner Commissioner
2 Second in Command Asst. Commissioner (Senior most) Addl. Commissioner
3 Field Operation and
Appeal Head
Asst Commissioner (2) Deputy Commissioner (3)
4 Division Heads and
Equivalents
Commercial Tax Officer (8) Asst. Commissioner (17)
5 Other Officers Deputy CTO (14) and Asst. CTO
(23)
Commercial Tax Officer
(28)
Total 49 50
34
35. MORE OFFICERS in FIELD
Present Proposed
Statutory/ Field Function
Officer 29 44
Assistants 52 49
Non-Statutory/ HQ Function
Officer 20 6
Assistants 9 12
Total
Officer 49 50
Assistants 61 61
35
37. CLIENT NEED STUDY FOCUS
Registration Policy & Process
Return Filing Policy & Process
Input Tax Credit (ITC) Cross Verification Policy & Process
Payment Policy & Process
Tax Deducted at Source (TDS) Payment Policy & Process
Reconciliation Process
Audit Parameters/ Return Scrutiny/ Business Intelligence (BI)
LTU and other Specialised Wings
Audit/Assessment
Enforcement
Statutory Forms, Way Bill/ Delivery Note/ Transit Pass Issue and Receipt
Electronic & Mobile (E & M)-Communication & Grievances Handling
Use of Services of Sales Tax Practitioners (STP), Citizen Service Centres
(CSC) etc.
IT System, software and hardware infrastructure), e-services
37
38. BEST PRACTICES of ANDHRA
PRADESH
Registration
Pre Verification in 30 minutes
Centralized
No Cost for any sub processes
No Renewal / Cancellation
No Security
Return
Simple, one page
No annexure
No ITC cross matching
Revised return upward/downward
Payment
Part payment allowed
Not linked to return – prior/ post
return
Penalty and tax payment not linked
Audit Parameters
Parameters are evolving
Assessment
Selection by higher up
By another territory officer
Communication
Email
STP Link
Access to limited dealer services
on authorization
38
39. BEST PRACTICES of TAMILNADU
Registration
Pre verification
Territory Officer issues RC in 7
days
Check list for desk and field
verification
Sensitive trade – post verification
by Enforcement
Sensitive Commodity notified
No renewal
Return
Staggered return filing
ITC cross matching done at invoice
level
Payment
Grace period for e-payment
TDS Payment
Centralized collection
Audit Parameters
Parameters are evolving
Inspection and Assessment
Selected by Commissioner/ from
Enforcement Inspection report
No visit of dealer’s premises
Steps for inspection and assessment
defined
Large Taxpayer Unit (LTU)
Chennai and Coimbatore City
Roving Squad
Carries Point of Transaction (PoT)
device
Accesses dealers profile and history
through device
Enters tax collection in portal
Generates receipt for tax collection
39
40. BEST PRACTICES of KERALA
Registration
Sensitive commodity notified
No security for composition dealers
Return
Staggered return filing
ITC cross matching done at invoice level
System generated annual return
Digitally signed
Revised return downward allowed
VAT, GST and CST return integrated
Payment
All payment e-payment
Advance tax and TDS reflect in return
TDS Payment
Electronic uploading by awarder
Reconciliation
Electronic of bank and treasury scroll in CTD
VATIS
Audit Parameters
Parameters are evolving
Assessment
Selected by Commissioner/ Enforcement
Inspection report/ Assessment Officer
Team for Assessment
Steps for Assessment defined
Statutory Form
Digitally signed application
Captures information from return
Form electronic and instant
Appeal
Online filing and status tracking
Communication
Official Communication internally by email
Communication to dealer by email ID
provided by CTD
Akshyaya and STPs
File return (Akshyaya fee partly borne by
40
41. BEST PRACTICES of KARNATAKA
41
Registration
Upload of scanned copies of
documents & photo with online
application
Online Tracking of status
GPS coordinates captured
Download unsigned Regn.
Certificate
No renewal
System based deactivation &
deregistration
100 commodity list for CST
Return
Composition (Qrly) and regular
(Mnly) dates differ
No sale figures obtained for ITC
cross verification
ITC purchases & CST receipts
obtained at invoice level
Revised return upward/ downward n
times in 6 months
Payment
E-Payment mandatory >25K
Payment precedes return acknowledgement
Online payment in 18 banks
Payment reported in the same day till 12
midnight
Statutory Forms
Obtain online (optional) without approval
Verification of form in mobile
E-SUGAM/ Transit Pass (external)
Mandatory for passing check post
E-SUGAM by mobile and online
Online transit pass mandatory for notified
commodities
Enforcement
28 vehicles fitted with GPS
Other Good Practices
E-Grahak/ Consumers
E-Grievances
42. BEST PRACTICES of MAHARASTRA
42 Registration
Pre-verification RC in one day, time
line for each sub-functions
Advisory visit: Good, Average, Poor
Rating
End to end service by Registration wing
Application received at counter &
distributed to Regn. Offices in Mumbai
Issue statutory CST form
Return
Electronic mandatory
Periodicity Mnly, Qrly, Bnly
ITC verification at TIN level
Payment
Electronic mandatory
Private banks added to online tax
payment
Part payment allowed
TDS
Higher TDS for Unregd dealers
Audit, Investigation
System selects audit centrally on
parameters
Random audit 20%
Audit on prior intimation
Audit note book provided by Dept
Time Limit and days for audit
completion
Investigation-specific audit – prior
approval & Search Warrant
Investigation followed by Audit in next 3
yrs
Refund
ECS of RBI credits to beneficiary
accounts
Communication
Communication to dealer by email
provided by CTD
Dealer to submit documents with DSC
Others
Identification Certificate to Mega Units
under Package Scheme of Incentive
44. CRITICAL ANALYSIS of
REGISTRATION
Prevention of bogus dealers versus mitigation of
compliance risk not defined
E-Registration still involves multiple visit of dealer to office
Submission of Hard Copy
Long list of information and documents
One Officer in Central Registration Unit (CRU) handles
entire verification and RC issue process
Hundred percent post verification
Wait period is high
No Tax payer profiling
No Industry/Standard Commodity Classification
44
45. RECOMMENDATIONS
RC to be issued on dealer profiling – Avoid Bogus Dealers
No Verification-instant by VATIS system on the portal
Pre Verification- 7 days, Officer to upload scanned copy in
dealers page for the later to download
Post Verification
Sensitive Sector - verification by Enforcement (Circular on
Sensitive Trade/commodity)
Others - verification by Assessment Officer
Do away with submission of physical application and
documents
Outsource part activities and fix a cost
Application one pager-few information/ document
Build profile gradually through different wings
Checklist based verification
Amendment as important as issue of RC
45
46. RECOMMENDATIONS (Contd.)
Renewal is a huge exercise - Discontinue
Cancellation – Discontinue
Segregate dealers active and passive
Organize Registration Camps-Issue instant RC
Reduce Work Load
Security Deposit – Ask as Exception
Cost of Registration and Renewal- Discontinue
Dealer to pay service fee to CSCs/ STPs
Enhance Enforcement for Enrolment
46
47. COMMODITY CLASSIFICATION
Schedule in VAT law gives commodity tax rate wise
Commodity grouping not done
Standard Industrial Classification (SIC) required for PAN India
uniformity
Harmonised System of Nomenclature (HSN)-Customs & Excise
National Industry Classification (NIC 2008)-CSO
Empowered Committee has customized HSN Code for VAT
One code shall have one tax rate
Objective is to track macro economic and fiscal trend of the
particular sector
Recommend HSN with addition of code for manufacturing and
Trading
Recommend as profile information, not at return level capturing
Dealer’s business volume may be segregated sector wise to the
extent possible
If not, business volume shall be taken as per his dominating
47
48. HSN Code Code for Manufacturing (1)/ Trading (2)/ Description
3006 10 00 1 Sterile surgical catgut, similar sterile suture materials
(including sterile absorbable surgical or dental yarns) and
sterile tissue adhesives for surgical wound closure; sterile
laminaria and sterile laminaria tents; sterile absorbable
surgical or dental haemostatics; sterile surgical or dental
adhesion barriers, whether or not absorbable.
3006 10 00 2 Sterile surgical catgut, similar sterile suture materials
(including sterile absorbable surgical or dental yarns) and
sterile tissue adhesives for surgical wound closure; sterile
laminaria and sterile laminaria tents; sterile absorbable
surgical or dental haemostatics; sterile surgical or dental
adhesion barriers, whether or not absorbable.
48
MODIFIED HSN CODE for GST
50. ANALYSIS of RETURN
50
Return and Annexure Long
Four VAT+ one CST return forms
E-Return for VAT, non VAT and CST
Annexure and Return form not fully integrated
VAT and CST return form not fully integrated
Return and Tax Payment Linked
Downward revised return not allowed in portal
Few channels of return filing
51. RECOMMENDATIONS
51
VAT return form can be simplified
Should be simple, small and uniform for all states - (Empowered
Committee & CTMMP Guideline)
Proposed return forms– two in VAT law+ one CST
1.Non Composition (VAT and non VAT)
2. Composition (Trading and Works Contractor)
Payment to be delinked from Return, Penalty for late return and tax due
be separate
Annexure to be integrated with return
System should answer the provision of law - accept downward revision
in revised return
Tax is collected from Consumer. Withholding the same attract more
penalty
Grace period for e-payment
Staggering of return filing last date
Discontinue annual return & ITC statements
Outsource to CSC and STPs for a user fee
52. INFORMATION CAPTURE in RETURN &
ANNEXURE
52
Return form captures total value of transactions,
tax rate wise, tax due, tax adjustments by way of
ITC, TDS, tax due and tax payment
Commercial Taxes Dept captures commodity wise
tax rate in annexure - Purchase and Sale
Not relevant, hence discontinue
Discontinue CST Annex on commodity wise sale
Collect as much additional information for cross
verification as can be used for business
intelligence
53. CST RETURN
53
May be Integrated with VAT return, if current
format of VAT return retained
New Annexure and Return linked
55. BUSINESS ENVIRONMENT in a SMALL
STATE
55
Small territory
Intra-state trade chain is short
Dealer base is small
Scope for circular trade/bill trading within state is
less
Physical cross verification of sales and purchase
records of dealers is easy in cases selected
through return scrutiny/ VATIS system based
audit parameters
56. CURRENT PRACTICE in VATIS
SYSTEM
56
Monthly return annexure capture commodity wise
value and tax rate in VATIS
System calculates tax in annexure, which is
populated in return
No list of commodity or commodity and tax rate
linkages
No information of TIN dealers from whom
purchased and to whom sold
No information on invoices of purchase and sale
57. KERALA – ITC VERIFICATION
57
Purchase and sales invoices are uploaded by dealers to claim ITC
Details captured include:
Invoice no. & date
Purchaser/seller TIN
Invoice value
Tax Amount
System facilitates electronic cross verification of sale and purchase
invoices of dealers in backward and forward transactions
Automated detection of undeclared purchases/sales
58. ANALYSIS of INVOICE TRACKING in
KERALA
58
Commodity group wise along with tax rate are captured in sales
front from drop down list.
Commodity group wise with tax rate and Invoice are captured
independent of each other.
Requiring too much information from the dealer.
System performance in uploading of invoice data not verified.
Time consuming method of providing commodity group wise tax
rates
Invoice detail is also time consuming and not accurate, if the
dealer does not have computerized accounts
Invoice details of sale and purchase can not be imported from the
computerized accounts of the dealers
Returns of two reputed firms are cross checked-out of sales made
on 15, 19 and 27 in a month by the seller, purchaser has reflected
invoice dated 27, not previous ones
This indicates lack of sincerity of dealers in providing information
or system deficiency in processing the same
59. ANDHRA PRADESH-ITC
VERIFICATION
59
No annexure to return form
No capturing of invoice level details
Hence no cross matching
Return asks sum of non ITC purchase and non
tax due (under VAT Act) sales
Tax rate wise gross value for ITC and Sale
Assessment selection is done by DCCT from the
minimum information in one page return, system
generated exception report
62. TAMIL NADU- ITC VERIFICATION
62
VAT (Form I) dealers fill in following annexures
Anx I- All goods receipts with transaction code
Anx IA-CST purchase
Anx II- All goods dispatch with transaction code
Anx III- Purchase with ITC claim against export / zero
rated sale
Anx IV-Sale details of export and zero rated sales
Annexures Capture
Invoice no. & date
Purchaser/ seller TIN
Commodity
Tax Rate
Tax Amount
One invoice is entered several times as per commodity &
63. ANALYSIS of INVOICE TRACKING in TN
63
Computerized accounting system of dealer need to
be customized a lot to provide invoice as well as
different commodities in the invoice having different
tax rate.
Dealers not having computerized accounting shall
spend lot of time in filling in the downloaded format
Chance of entering wrong data is high
System performance in uploading huge data not
verified
Invoice mismatch happens in almost all dealers
One invoice entered several times creates further
scope for mismatch-Out of several entries of one
invoice, one may not match
64. KARNATAKA-ITC VERIFICATION
64
E-Sugam requires seller/buyer to upload invoice
details for verification at check post
TIN and Name of Buyer
Commodity Group
Value (No Tax Rate or Tax Value)
Annexure I of Return captures ITC purchases
TIN
Invoice No/ Date
Value
Tax Value(not Rate)
No Cross Matching as information is not complete
66. MAHARASHTRA –ITC VERIFICATION
66
Captures TIN wise Purchases and Sales
Format captures
TIN (Not Name of the Dealer)
Net Taxable Value
Total Tax (not tax rate wise)
Total
Tax is not calculated from tax rate in Annexure
Tax rate wise taxable value and tax amount is not
auto reflected in return from Annexure
69. CONCLUSION from STUDY of other
STATES
69
Invoice matching does not serve the purpose, because dealer may not
be able to provide accurate data
There cant be penal provision for wrong/ incorrect invoice number as
long as total value and tax amount (due and ITC) are correct
System level cross matching designing may be correct
In case of system generated sale invoices, selling dealer may provide
accurate invoice number and date in importable format.
Purchasing dealer may receive different series of invoice number such
as AI-23487 C, BC-984578 K, I 123456789/P. Purchasing dealer can
not provide hundred percent correct information as this is a manual data
entry in his computerised accounting system.
Invoices received by purchasing dealer may have varying series and
varying characters with special characters. Purchasing dealer may add
a space, delete a hyphen or insert an askii character by mistake.
Exception report is bound to happen on cross matching
Ends up in return scrutiny assessment/ intimated visit of the business
premises of most of the dealer
70. BUSINESS INTELLIGENCE (BI) of IT
SYSTEM
70
Business Intelligence (BI) requires
standardization
TIN and ToT number is standardized
Tax rate is standardized
Commodity not standardized by the VAT
administration
Invoice no of dealers vary-cannot be standardized
Value/ Amount cannot be standardized
Use of non-standardized data will lead to huge
mismatch
71. FACTORS in ANNEXURE DESIGN
71
Confidentiality of Information of Dealer
Invoice level figures reveal business strategy of the dealer.
Standards followed by the CTD on guarding the privacy of the data
provided by the dealer is not established
Usability of Information
Unless the authority can use the information, the same should not be
collected
Information collected over a period, if not used promptly, becomes
garbage or load on the system
Cost of Compliance Vs Outcome
Collection of information slows down the return submission process,
return scrutiny process and follow up action.
Cost is huge for dealer, CTD officials and CTD System.
Intelligent Use of Limited Information
Effective enforcement and return scrutiny of minimum information is the
key to increase voluntary compliance.
If intended benefit can be obtained from alternative less laborious model,
72. MODELS of TAX INFORMATION
COLLECTION
72
Gross amount, when tax rate increases with volume of business/
income (Aggregate/ Income Level) – for Direct Tax and ToT
Dealers
Gross amount each tax rate wise (Tax Rate Level)
Gross amount for goods receipt and dispatch from and to
registered TIN dealers from all over India plus gross amount of
export and import (TIN Level)
Invoice level detail capturing TIN/others, gross amount & gross
tax (Invoice Level). However, if one invoice, there are more than
five entries with different tax rate is given, this detail shall not be
captured.
Detail break up of commodity/ commodity group wise amount, tax
rate (Line Item/ Commodity Level). This shall not capture TIN/
invoice wise receipt/ dispatch.
Combination of Tax Rate and Line Item/ Commodity Level
Combination of TIN level and Line Item/ Commodity Level
Combination of Invoice and Line Item/ Commodity Level
73. CHARACTERS of a TRANSACTION
73
VATDealertoVATDealer
• TIN of
Seller
• TIN of
Purchaser
• Invoice No
• Date
• Commodit
y
• Value
• Tax Rate
• Tax
amount
VATDealertoToTDealer
• TIN of
Seller
• ToT No of
Purchaser
• Invoice No
• Date
• Commodit
y
• Value
• Tax Rate
• Tax
Amount
VATDealertoUnrgd.Dealer
• TIN of
Seller
• Name of
Unregd
Dealer
• Invoice No
• Date
• Commodit
y
• Value
• Tax Rate
• Tax
Amount
•TIN of
Seller
•No Name
•Invoice
No
•Date
•Commodi
ty
•Value
•Tax Rate
•Tax
Amount
VATDealertoConsumers
74. INVOICE vs TIN LEVEL CAPTURE
74
Invoice or TIN level capturing
TIN to TIN can be tracked
TIN to ToT can be tracked
TIN to Unregd. dealer may be tracked
TIN to Consumer can’t be tracked
Shall have same result in tracking above four
transaction
TIN level capturing shall find out composition &
unregistered dealers crossing the threshold limit
75. INVOICE vs TIN LEVEL CAPTURE
(Contd)
Invoice
Invoice level data
shows value & tax of
each invoice that will
sum up to one TIN wise
purchase or sale value
& tax
Unless, commodity
wise/ tax rate wise
break up will be asked
within the invoice,
annexure shall not auto
calculate, tax rate wise
return page
Dealer will resist
providing tax rate wise
TIN
TIN level data will be
sum up done by dealer,
value &Tax
As number of entries in
TIN level capturing will
be less, dealer will be
willing to provide tax rate
wise break up of each
TIN
Thus tax rate wise
calculation in annexure
can be reflected in return
75
76. INVOICE vs TIN LEVEL CAPTURE
(Contd)
ITC Purchases in the month of Jan 2013
TIN
Name of
the Firm
Invoice
Number Date Amount
Tax
Paid
33112
58015
7
M/s ABC
Corpn Pvt
Ltd
AI-
23487 C
15-
Jan-13 500000 36000
Do
BC-
984578
K
27-
Jan-13 600000 32000
Total 1100000 68000
ITC Purchases in the month of Jan 2013
TIN
Name of
the Firm Amount
Tax
Rate
Tax
Paid
3311258
0157
M/s ABC
Corpn
Pvt Ltd 800000
4%
32000
Do 300000
12%
36000
Total 1100000 68000
76
77. EASE of PROVIDING INFORMATION
Can generate data,
dealer wise and
within dealer, tax rate
wise
Can generate invoice
detail wise and within
invoice, tax rate wise
Unless tax rate wise
information is
captured, Annexure
and return cant be
Very small dealers enter all
invoices serially date wise, tax
rate wise/no tax rate wise
Can provide -invoice wise data
and within invoice, tax rate wise
/no tax rate wise
Medium and Large dealers
maintain party ledger wise and
tax rate wise
Can provide TIN and Tax Rate
wise
Extra effort shall be more in
providing invoice and tax rate
wise data
Small Dealers can modify
accounting to party ledger wise
to provide TIN wise
77 Electronic Account Manual Account
78. ITC CROSS VERIFICATION at TIN
LEVEL
78
Minimum error shall happen at TIN and Tax Rate and
hence minimum mismatch
Gross values of transaction and Tax value may
mismatch if one party does not report in same tax
period
System shall give cumulative figure and carry forward
the balance mismatch from previous period (positive
or negative) just like ITC carry forward
No exception report on absolute hundred percent
value non-matching-difference in percentage of total
claim
Report shall be generated on variation of 20% in case
of small, 10% in medium and 5% or more in large
dealers
79. Recommended Model-TIN & Tax
Rate79
Current Practice of Commodity and tax rate wise
capture without any guidance in VATIS of
commodity and tax linkage does not serve any
meaningful purpose - Hence be discontinued
TIN and within TIN, Tax Rate wise Value of ITC
purchase and taxable sale under VAT be
captured
TIN level matching shall give the same effective
result as Invoice level matching, but with less
effort of all
80. INVOICE LEVEL CAPTURE of INTER-STATE
TRANSACTION
80
Single point capturing of data from dealer
Interstate transactions, which do not have bearing
on ITC, but linked to statutory forms (issue/
receipt)- be captured-TIN and invoice wise, but
not tax rate wise
Interstate transactions shall have a code each for
CST purchase/sale, zero rated purchase / sale,
commission/ branch transfer, export/import-match
forms issue and receipt, special rate of tax declared
by the CTD for an industry
82. CRITICAL ANALYSIS of PAYMENT
Cash, Cheque/ DD and E-Payment
E-Payment only for return, cancellation of
statutory form & Advance Tax (vehicles & cars)
Once dealer opts for online payment cannot go
back to other mode of payment
Online payment by internet banking of CBS of
Indian Bank, Bank of Baroda, Indian Overseas
Bank, IDBI, SBI
Cannot make payment through debit/credit
card, Master/Visa
No Bank Payment Gateway-dealers having
82
83. CRITICAL ANALYSIS of RETURN
PAYMENT
E-Payment linked to completion of return filing
Once return completed, dealer may continue
making online payment from return or approach
CTD office for manual payment
No grace period for online payment, while cheque
clearance takes 5 to 10 days time
Manual payment system is complex, long queue
in peak period, many people involved
Linkage of tax & penalty makes it more complex-
cash payment of penalty at one counter and
cheque/DD payment of tax at another
83
84. RECOMMENDATIONS
Grace Period for online payment and Cash Payment
Multiple Payment options
Mandatory e-payment for large tax payers
Zero Balance Accounts in approved banks for online payment to dealers
having business accounts in other banks
Return filing and payment of tax delinked
Tax due and Penalty payment delinked
Any types of payment be accepted by designing a suitable Commercial
Tax Chalan in VATIS leading to CBS of banks
Bank Payment Gateway
Central Bank of India (CBI), service provider bank, is providing such service
to CTD, Odisha for 35 such banks
CBS of CBI integrated to CTD/ Treasury and issues acknowledgement receipt
immediately to dealer and CTD
CBI is providing dealers payment gateway to respective banks
fund is transferred to a pool account of the CBI through online transfer from
other banks.
CBI transfers such receipt on T+1 basis to govt treasury
84
85. OUTSOURCE CHEQUE/ DD
COLLECTION
Option 1:Treasury Bank
Access in VATIS just like Clerks and Cashiers
Information Exchange between VATIS and CBS instead of manual
acknowledgement
Generate acknowledgement from bank CBS and VATIS with bank
branch code
Bank anyway get paid by RBI, RBI may pay more or use its
Goodwill
Option 2: Reengineered current process
One counter for all divisions in state capital city
Counter like banks- Air conditioned sitting facility & queue
Management
Staggering collection through out the month
Information Exchange between VATIS and CBS instead of manual
acknowledgement
85
86. OUTSOURCE CASH COLLECTION
Option 1:Treasury Bank
As discussed before
Option 2: CSCs and STPs
Service fee for cash receipt
Authorized by VATIS to transact
Make e-payment from their own bank account
Generate receipt from VATIS and Bank for dealer with CSC regn.
number recorded on it
Frequently replenish their account with cash deposit
Option 3: CTD Officials: must discontinue
Option 1 is recommended strongly for both Cash &
Cheque/DD Payment-real time updation
86
87. CRITICAL ANALYSIS of ACCOUNTS
It is only two way between Bank and Treasury for
each transactions in the state
Ideally, there is a three way reconciliation for CTD
- CTD, Treasury and Bank each transaction wise
CTD and Treasury reconcile at gross figure level
monthly due to lag in computerization of treasury
E-payment is electronically reconciled by
processing e-scroll received from bank
There is no reconciliation of manual payments
Manual chalans returned back by bank are
accepted as sacrosanct-no check if a forged
chalan comes from bank
87
88. RECOMMENDATIONS
Accounts ledger made available online to respective
dealers
As treasury is not computerized, three way electronic
reconciliation can’t happen
Proposed outsourcing model can enable hundred
percent e-reconciliation between bank and VATIS
Batch reconciliation on T+1 basis
Different reconciliation between Citizen Service
Centres (CSCs), respective banks & VATIS may be
done
Reconciliation will be done on progressive and
cumulative basis. The status will be
Posted/Realised/Received/ Cheque/DD cleared
Pending
88
89. CRITICAL ANALYSIS of TDS
PAYMENT
TDS deducted by work awarder to works
contractors (WC) as per VAT law
Manual, no control over awarders making
payment on time
Contractors receive payment, but could not file
return due to non receipt of certificate from
awarders and non reflection of TDS in their e-
return
Awarders make payment by DD/ Cheque, but
don’t give correct list (form R) and TIN number of
contractors against the DD amount
Collection goes to the CTD division to which
89
90. RECOMMENDATIONS
Policy
Register awarders with a registration number
other than TIN (if they have any).
Simplify form R, make it consolidated one form
for all works contractors and generate it online
from VATIS – mandatory
No separate TDS certificate form T to WC-WC
can generate from VATIS based on form R
submitted by Awarder
Online issue of form S for no deduction of tax or
reduced deduction of tax to awarder and WC
90
91. RECOMMENDATIONS (Contd.)
Process Re-engineering
Map form S to form T & form T to form R
Collection on behalf of the works contractors be
shown in the revenue collection of the AO to
which the contractor belongs to.
The payment shall be automatically reflected in
the dealers ledger and the return to which the
TDS belongs
Works Contractors e-return should be flexible to
accommodate late receipt of TDS, if the works
contractor has reported tax deduction
91
92. GROUP TDS CERTIFICATE FORM
92
Form R
Awarders Regn. No 1234567890 Awarders Name M/s ABC Public Ltd
Sl No TIN
Number
Name of the
Works
Contractor
Work
Order No
Amount
Released
TDS @ TDS
Amount
94. CRITICAL ANALYSIS of REFUND
No standard procedure for refund claim
verification
Revenue collection: no approval by CTD, no role
of Treasury except accounting
Refund: approval by CTD and Treasury
Law has provision for refund with penal interest for
delay beyond 90 days
Refund claim is done through return
No electronic monitoring of refund claim settled
against the claim
No reconciliation of refund made by bank
94
95. RECOMMENDATION on REFUND
VERIFICATION
95
Authenticity of Purchase Invoice - TIN level
matching as recommended in ITC verification
100% purchase invoice verification not practical
Define sampling procedure to eliminate discretion
Star rating of dealers claiming refund be based on
Percentage of purchases made through bank payment
Refund claim of higher star dealers processed
quickly
96. RECOMMENDATIONS
E-refund processing and reconciliation required to
close a refund claim = prevent double refund
E-refund shall be partial electronic till treasury
automation and integration with treasury system
Time lines for each sub steps of refund be defined
Delay responsibility be fixed in case interest
payment arises
After bank makes refund, electronic scroll
reconciled against payment claim, period of
claim, e-refund order and amount in VATIS
96
99. SAMPLE PARAMETERS for BI
Sales: Purchase ratio less than 80% on cumulative basis over a period of time
Industry sector growth rate (all dealers registered in that industry sector): Growth
rate of the dealer belonging to that industry
Return not filed in number of months in last 12 months
Credit return (ITC Carry forward) in number of months in last 12 months
TIN level matching exception report top hundred highest differences cumulatively
in last 12 months
Import / export details provided in return annexure are cross matched with port
consignment declaration to trace purchase suppression/ wrong ITC refund
claims
Details of CST statutory forms issued to other state dealers and received from
other state dealers are verified against CST purchase and sale invoices
disclosed in return annexure respectively.
Opening stock particulars, transactions during the year and closing stock
particulars and audited statements are verified against the annual return - If
differences in stock position is 20% or more and the revenue implication is Rs. 1
lakh or more (at appropriate tax rate)
Offence records and crime records are more
Sensitive goods
Export and Interstate despatch high
99
100. MAHARASTRA PARAMETERS for AUDIT
SELECTION
100 Parameters Extreme End Maximum
Risk
Tax Throughput Input + Output tax >Rs 10 Lakh in last 12
months
60
Compliance Tax from assessment order of return scrutiny
exceeds Rs 1 Lakh or advisory visit reports
poor rating
40
Complexity of
Business
>5 types from international importer, branch
transfer/commission agent, inter state sale,
interstate purchase, works contract, exempt
goods, multiple branches =10 points
SEZ = 20 points
Package scheme of incentives = 20 points
50
Mark UP <40% of the average of the business/
commodity
40
Date of last
Audit
>3 Years 40
Legal Entity Proprietor 20
102. COMPARATIVE ANALYSIS OF
ENFORCEMENT
102
Nature of Evasion Retur
n
Scruti
ny
Audit/
Investi
gation
Mobil
e
Squa
d
E-
wa
y
bill
s
Che
ck
post
s
Manual
Statuto
ry
forms
Statuto
ry e-
forms
Un reported
Intra State No Yes Limite
d
No Ltd No No
Inter State No Yes Ltd No Ltd No No
Reported
Correct Reporting Yes Yes Yes Yes Yes Yes Yes
Under reporting sales Yes Yes Ltd No Ltd No No
Over reporting purchase Yes Yes Ltd No Ltd No No
Undervaluation No Yes Ltd No Ltd No No
Forged statutory forms No Yes Ltd NA Ltd Ltd Yes
103. RECOMMENDATION on
ENFORCEMENT
103
Merge Enforcement (IW) & Mobile Wing
No requirement for check post/ way bill
Remove assessment functions from IW
Law does not speak of inspection report, even
though this should be the main activity of
enforcement
Procedure for Inspection and Report suggested
Instruction from higher up on record
Verification & return of accounts in time
Time bound reporting
Transparency by generating report from VATIS
Approval before dispatch to Assessing Officer
104. RECOMMENDATION on MOBILE
ENFORCEMENT
Technological enablement for proper verification of
consignment, quicker disposal, collection of tax
Use of mobile phone with GPRS and GPS may be
used to access VATIS portal to
Verify TIN and CST Registration status
Verify Profile
Principal place of Business
Godown
Branch
Commodity
View return filing and payment status
Enters security collection if any
Generates receipt for fine collection from handheld
printer operating in blue tooth connection to mobile
104
106. CRITICAL ANALYSIS of ASSESSMENT
Law: Dealer to be audited at least once in three
years
No real audit, only compliance of law
Assessment can be initiated on
return scrutiny by Assessment Officer (AO)
the list provided by the Commissioner
the inspection report submitted by the Enforcement
Wing
AO can
Call for accounts and documents
Can do audit visit on prior intimation
106
107. RECOMMENDATIONS on SETTLEMENT
One type of Assessment originates from Return
Scrutiny due to
factual error / or clear case of wrong ITC claim/
selection of lower tax rate
No Audit visit
Verification of Accounts in CTD office
If admitted by dealer, only twice penal interest of
delay tax payment
If not, taken up under assessment procedure
107
108. RECOMMENDATIONS for
ASSESSMENT
Once in three year provision be removed
Officer be given a target
Assessment be done in team of three
Team head from other territory
No audit visit in case of Inspection Report
Assessment Proposal and draft assessment
approved by higher up
Provisional assessment order communicated
Reply considered and final order served
AO generated from VATIS for transparency
108
110. ANALYSIS and RECOMMENDATIONS
There is no specialized unit
Industry Assessment Circle (IAC) is too crowded with
small manufacturers
Highest tax payers need priority attention and quicker
service
Highest taxpayers return scrutiny and assessment
requires specialization
50 highest taxpayers be selected from entire UT
under LTU
500 next highest tax payers in manufacturing be kept
in IAC
110
112. ANALYSIS of CURRENT SCENARIO
FORM ISSUE by the STATE
End to end electronic-process is fairly OK
Application filling in invoice details
Deemed approval after 7 days
Generates filled in form-no blank form
Downlodable pdf form
No visit to CTD for signature of officer
Pain Areas
Upload data for one form at a time
System performance is not satisfactory
Data loss with error message or rejection
Matching form issue month to invoice date is against
the law
112
113. ANALYSIS of CURRENT SCENARIO
(Contd)
SUBMISSION of FORM RECEIVED from OTHER STATEs
Upload data for one form at a time
System performance is not satisfactory
Data loss with error message
Dealer takes print of data uploaded for one form
at a time
Brings forms received along with prints to CTD
Waits for officers time for verification and
acceptance of documents
System performance is so slow, officers unable to
check uploaded information from VATIS
113
114. RECOMMENDATIONS
Invoice wise one time data entry with return for CST
transactions, both receipt and dispatch
All invoices to be uploaded once with code of
transaction
Online application of a form for a particular dealer
shall fetch all pending invoices of the that dealer
cumulatively till admissible period
Dealer selects invoices without any restrictions of
matching form period to invoice date
Once selected those invoices shall be freezed
System performance to be improved
Blocking of system from15th to end of month
removed
114
115. CANCELLATION of E-FORMS
AS-IS
Fee is flat Rs 1000 for all
Indemnify against the revenue loss
Cancellation application is online
But officer approves it after updation in TINXSYS
Can generate fresh form again uploading data
115
116. CANCELLATION of E-FORMS (Contd)
RECOMMENDED TO BE
Cancellation fee should be gradual with
increasing risk
Freezing and de-freezing of already uploaded
invoice data- no repeated data upload
TINXSYS uploading of cancelled form status
before approving fresh issue of another form is
good, but not practiced in other states
TINXSYS does not accept modification or
correction of same form, without cancelling-
Empowered Committee may be approached
116
117. ABOLISH ISSUANCE of FORMS to
DEALERS
AS IS
Dealer of State A furnishes interstate purchase/
receipt invoice level data to Tax Dept of State A
Dealer asks for forms for goods receipts for a
particular dealer of another state, State B.
Tax Dept, State A issues form to the dealer
Dealer sends the forms to the dealer of State B
Dealer of State B submits the form against the
invoice details to the Tax Dept of State B
117
118. ABOLISH ISSUANCE of FORMS to DEALERS
(Contd)
RECOMMENDED TO BE
Dealer of State A furnishes interstate purchase/ receipt invoice
level data to Tax Dept of State A
Dealer of State A asks for forms for goods receipts for a particular
dealer of State B.
Tax Dept of State A confirms the reflection in return of Dealer of
such goods receipt from such TIN vide such invoice numbers.
Confirmation will be available for dealer to view in his log in and
download.
Tax Dept of State A sends the confirmation in usable format to
respective state, State B Tax Dept and TINXSYS
State B Tax Dept shall consume the same information in its
VATIS
State B Tax Dept shall reflect in the ledger of the dealer of that
state & match against the invoice detail provided at the time of
filing of return.
AO of that dealer shall accept that information and assess.
Misuse of forms shall be eliminated and cancellation shall be
118
119. INTERSTATE DATA EXCHANGE
FORMAT
119
Goods Received in Interstate Transactions from State X in the returns period of __
TIN
of
supp
lying
deal
er
Name
of the
supply
ing
dealer
TIN
of
recei
ving
deale
r
Name
of the
receivi
ng
dealer
Inv
oice
No
Invo
ice
Date
Amo
unt
Tax
in
the
invo
ice
Transaction Code (sale,
branch transfer.
Commission sale, in the
course of export)
Data exchange shall be done once in a month among all the states tax
administrations bilaterally
Can be experimented among few willing states
121. INQUIRY & GRIEVANCE
MANAGEMENT
121
Does not exist
E-mail receipt not logged
Grievance addressed selectively
Call Centre with IVR and executives required to guide on tax
laws, update on tax payers account, receive and address
grievances
Systematic log & addressed on FIFO
System to record complain by SMS, Voice, email, portal or hard
copy and time of resolution
System guides call centre staff for consistency and accuracy of
reply
Two Tier executives to manage Call Centre Management
Tier 1- resolve fundamental inquiries and grievances
Tier 2- resolve complex issues referred from tier 1 and forward
further to respective officers in the dept. and follow up on resolution
by later
122. COMMUNICATION
122
Not effective
Comprehensive communication program
throughout
Use wide variety of channels
General guidance booklets explaining
forms, law, process and taxpayers’ obligations
Sensitization of Target Group & guide on target
sector
Gadget Notifications, Circulars, FAQs, Taxpayers
guide made available on the portal, IVR, email and
SMS
123. FRONT OFFICE
123
Single window for all services including payment
Inquiry Counter cum help desk separate in the
same front office
PPP model for managing Front Office
Online services made available in the front office
Modern facility and Queue Mgt System in the
office
Specialized staff o handle front office functions
124. ADVANCE RULING & ALTERNATE
DISPUTE RESOLUTION
124
Advance ruling not working
No alternate dispute resolution mechanism
Recommended time bound response by Advance
Ruling Body
Advance Ruling Body reconstituted keeping two
highest officers of the department and a judge of
High Court as Chairman- Majority decision
Ruling Case Specific, but need to be made
available to tax payers for guidance
Facilitator for ADR to avoid time consuming
litigation and high cost for both tax administration
& taxpayers
125. APPEAL
125
Commissioner of Commercial Taxes
AAC (Appeal)
AO
Dealer
Finance Department
Secretary to the
Government (CT)
STAT
High Court
Revisio
n
Suo-
motto
Revision
Appeal
Appeal
Revie
w
Appeal
Revie
w
Suo-
motto
Revision
Revisio
n
Writ
Writ
Supreme Court
126. APPEAL
126
Appeal process is fair & elaborate, but time consuming
Not many cases in a small federal state
Recommended time bound disposal till Tribunal- review of
High Court process is not in scope
Appeal Case Management System required with work
flow, document and order available for all stakeholders
Online filing of appeal petition by taxpayers and online
service of notice
Alert generated to all stakeholders on time limit and
submission of documents
Cases of legal interpretation on same theme grouped and
joint hearing taken up
Legislative measures may be introduced benchmarking
against best practices and give relief to taxpayers
retrospectively.
128. SAMPLE KPIs
128
Grou
p
KPIs Uni
t
Formulae
A. FUNDAMENTAL INDICATORs
1 Revenue collection % Tax wise and tax payer category wise gross
collection against budgeted projection
2 Cost of collection % Revenue collection by Expenditure of Dept/
Unit
3 Tax payment
compliance
% % of taxpayers pay self assessed tax by due
date
4 Return Compliance % % of regd. taxpayers file return by due date
5 Audit Effectiveness % % of revenue realized from audit (including
conditional stay) to revenue paid in those
returns
B. REGISTRATION INDICATORs
1 Growth in
Registration
% % growth in category wise tax registrants
2 Registration % % of registrations in camps total registrations
Reference: A Draft Plan for Implementing VAT in Bangladesh by IMF Jan 2013
129. SAMPLE KPIs (Contd)
129
Grou
p
KPIs Uni
t
Formulae
C. RETURN & PAYMENT INDICATORs
1 E-Return % % of E- return to total returns filed by due date
2 E-Payment % % of number of E-payment to number of
payments
3 Return
Processing
tim
e
Avg time for processing a return from date of
filing
4 Payment
Processing
tim
e
Avg time from date of payment by taxpayer till
reflection in his accounts ledger in VATIS
5 Refund
Processing
tim
e
Avg time from date of filing refund claim by
taxpayer till refund approval
6 E-Refund tim
e
Avg time from refund approval till credit of refund
to tax payers account
7 Taxpayer
satisfaction on
manual & web
nu
mer
ic
Time spent at web portal, bank, front office or
service centre, number of visits, easy of filing
return, annexure, making payment and refundReference: A Draft Plan for Implementing VAT in Bangladesh by IMF Jan 2013
130. SAMPLE KPIs (Contd)
130
Grou
p
KPIs Uni
t
Formulae
D. TAXPAYER ASSISTANCE INDICATORs
1 Call Centre
Performance
tim
e
Avg wait time to get through to the call centre
executive and hold time during the call
2 Inquiry
Resolution
tim
e
Avg days from Inquiry request by different modes
to reply conveyed by Dept through designated
mode
3 Grievance
Resolution
tim
e
Avg days from grievance request by different
modes to reply conveyed by Dept through
designated mode
4 Advisory Visit Nu
m
Number of visits to taxpayers at doorstep for
guidance
5 Counseling
communications
% Number of recorded counseling communications
to number of return scrutiny flaws observed
6 Effectiveness of
Advance Ruling
tim
e
Avg time from application to disposal
Reference: A Draft Plan for Implementing VAT in Bangladesh by IMF Jan 2013
131. SAMPLE KPIs (Contd)
131
Grou
p
KPIs Uni
t
Formulae
E. AUDIT INDICATORs
1 Refund audit % Amount of wrong refund claim denied to total
claim
2 Demand audit % Amount of tax & penalty demanded to total tax
paid in related returns
3 Settlement % Number of settlements to sum of audits &
settlements
4 Quality of audit % Revenue realized from final appeal proceedings
wrt audit demand raised in those cases
5 Audit time tim
e
Time spent on audit to demand Rs 1 lakh tax &
penalty
6 Audit taxpayer
satisfaction
nu
mer
ic
Transparency in selection and conduct,
timeliness, fairness, quality through survey
(develop survey index)
7 Risk based Audit nu Feedback from Auditors on the parameters and
Reference: A Draft Plan for Implementing VAT
in Bangladesh by IMF Jan 2013
132. SAMPLE KPIs (Contd)
132
Grou
p
KPIs Uni
t
Formulae
F. ARREAR INDICATORs
1 Arrear collection % Arrear collection to total return payment in the
area
2 Old arrears % Arrear collection from cases >1 yr of return
period/ demand/appeal order to total arrear
collection
3 Arrear resolution % Number of accounts resolved to total arrear
cases
4 Arrear taxpayer
satisfaction
nu
mer
ic
timeliness, fairness, quality through survey
(develop survey index)
G. ENFORCEMENT INDICATORs
1 Effectiveness of
enforcement
$ Avg gross/ taxable turnover declared in return of
tax payers selected for enforcement visits
2 Efficiency of % Tax realized in a financial year from enforcement
Reference: A Draft Plan for Implementing VAT
in Bangladesh by IMF Jan 2013
133. SAMPLE KPIs (Contd)
133
Grou
p
KPIs Uni
t
Formulae
H. APEAL INDICATORs
1 Closure of
appeal
nu
m
Number of cases closed
2 Appeal process tim
e
Avg time taken for closure of appeal cases from
admission of appeal
3 Appeal quality % Higher Appellate forum/ Court changed amount of
appeal outcomes of lower court in percent
4 Appeal
taxpayers
satisfaction
nu
m
timeliness, fairness, quality through survey
(develop survey index)
Reference: A Draft Plan for Implementing VAT
in Bangladesh by IMF Jan 2013
134. MODIFIED KARNATAKA MODEL
134 Objectiv
e
Action Succes
s
Unit Weig
ht
Target/ Criteria Value
Excelle
nt=100
%
Very
Good=9
0%
Good=
80%
Fair=70
%
Poor=6
0%
Revenu
e
mobilizati
on
Achieve
Target,
Complete
Audit of 3%
Taxpayers
Reach
Target
or
Exceed
$100
Bn
num
ber
40
Services
at the
Door
Step
Statutory
Forms
Availabl
e to all
Dealers
Per
cent
4 100 90 80 70 60
e-SUGAM do 4 100 90 80 70 60
Transit
Pass
do 2 100 90 80 70 60
Adoption
of E-
Governa
nce
E-Payment 80% Per
cent
2 80 70 65 60 55
E-Return
PT
50% do 1 50 45 40 35 30
E-Return 50% do 1 50 45 40 35 30
135. MODIFIED KARNATAKA MODEL
(Contd)
135 Object
ive
Action Succes
s
Unit Weig
ht
Target/ Criteria Value
Excelle
nt=100
%
Very
Good=9
0%
Good=
80%
Fair=70
%
Poor=6
0%
Tax
Collect
ion
Efficie
ncy
Assessment
of old Sales
Tax
Assessment
Comple
ting
≥50000
num
ber
2
Collection of
old Arrears
Achieve
≥$1 Bn
do 1
Image
of Tax
Admn
Consultative
Meeting
≥15 num
ber
2 15 13 11 10 ≤10
Media
Campaign
≥4 do 1 4 3 2 1 0
Capac
ity
Buildin
g
Training of
Officers
≥ 250 num
ber
1.5
Training of
Officials
≥ 300 do 1
Advance ≥ 50 do 0.5
136. 136 Objectiv
e
Action Success Unit Wei
ght
Target/ Criteria Value
Excelle
nt=100
%
Very
Good
=90%
Good
=80%
Fair
=70%
Poor
=60%
Restruct
ure
Record
Room
in100
offices
num
ber
1.5 100 90 80 70 ≤70
Functional In 10
functions
do 1.5 10 9 8 7 ≤7
Transpar
ency in
Posting
Posting at
Checkpost
on rotation
Achieve
by date
Date 3
Efficient
functioni
ng of
Result
Framewo
rk
Approval of
Draft RFD
Achieve
by date
Date 2
Submission
of annual
result
Achieve
by date
Date 2
Long Term
Strategy
5 yr plan
by date
Date 2
Stakehold
er
Officials Survey % 5
Taxpayers do do 5
MODIFIED KARNATAKA MODEL
(Contd)
137. 137 Objec
tive
Action Success Unit Wei
ght
Target/ Criteria Value
Excelle
nt=100
%
Very
Good
=90%
Good
=80%
Fair
=70%
Poor
=60%
IT
Syste
m
Website
server
Uptime
100%
% 1 100 98 95 90 ≤90
E-services 100% E- % 1
E-
Procurement
100% E- % 2
M&E source 100% MIS % 1
GOs
available
100% by
next day
% 1
Plan, Budget
available
100% in a
week
% 1
Griev
ance
Handl
e
Through IVR 100% % 2
Resolve all
(IVR+other)
100% % 2
Admin
reform
Amend
archaic
Notify Num
bers
1.5 10 9 8 7 ≤7
MODIFIED KARNATAKA MODEL
(Contd)