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Outsourcing to local firms exposes I-T data to fraud

The Income Tax (I-T) department is still facing problems with its information technology (IT) network due to a shortage of technical manpower and some of the systems still not having fully stabilised.

S. P. S. Pannu   New Delhi     Last Updated: September 29, 2010  | 14:53 IST

The Income Tax (I-T) department is still facing problems with its information technology (IT) network due to a shortage of technical manpower and some of the systems still not having fully stabilised.

According to sources, the IT department has to outsource some of its work due to a shortage of manpower and this is being done at the local level even to some small- time infotech companies, which can compromise the integrity of the data.

I-T's bitter experience

How safe is your I- T information?

The I-T department has to outsource some of its work due to a shortage of manpower.

This is being done at the local level. So, some of it reaches small- time infotech companies. These outsourced agents often know the ID and passwords of officers of the I- T department, which gives them access to confidential data.

This exposes the system.

Latest debacle

Recently, the computer network of the department of Customs was hacked to siphon off official funds meant for export incentives under the duty drawback scheme. The passwords of Customs officials were used to log into the computer network to get the details of the consignments dispatched by genuine exporters from Ludhiana.

Hindrances

Even as the computerisation of the I- T department has come a long way, it is also trying to train its staff meet the new challenges. However, the pace of progress is not good enough. Even now, glitches continue to surface in the e- filing system. This was reflected in the postponement of the last date for filing e- returns in July this year because of a network snag.
Sources disclose that these outsourced agents often know the ID and passwords of officers of the I- T department, which gives them access to confidential data. This exposes the system to a risk of manipulation and misuse.

Recently, the computer network of the department of customs was hacked to siphon off official funds meant for export incentives under the duty drawback scheme.

The passwords of Customs officials were used to log into the computer network to get the details of the consignments dispatched by genuine exporters from Ludhiana.

These consignments were then presented as exports of a front company to claim refunds. Customs officials claim that computer professionals employed for outsourced work were responsible for leaking the passwords.

The I-T department issues refunds running into thousands of crores every year and there is a potential risk involved of the system being hacked. Refunds amount close to 15 per cent of gross corporate tax while in the case of individuals it is around nine per cent. In 2007- 08, for instance the value of refunds amounted to Rs 29,887 crore.

A senior I-T official said the departmental staff is not supposed to give out their passwords and in case the password is misused it can be found out and the officer concerned can be brought to book.

The Assessment Information System (AIS) of the I-T department is an online, menu- driven software, which assists the assessing officer (AO) in carrying out the assessment.

The data on the paper returns filed by taxpayers are fed by the range staff of each AO into the AIS. The bundles of data are categorised into segments such as ' nil demand', ' refund' and ' demand'. Employees of firms doing outsourced work also gain access to this data when they get the passwords of the official staff.

According to sources, even as the computerisation of the I-T department has come a long way, it is also trying to train its staff meet the new challenges.

However, the pace of progress is not good enough.

Even now, glitches continue to surface in the e-filing system.

This was reflected in the postponement of the last date for filing e- returns in July this year because of a network snag.

Since the computerised system has not fully stabilised the department has not been able to meet its own target for reducing delays in the payment of I- T refunds. This is considered a critical area for achieving efficiency in tax administration.

The department has also been troubled with the existence of duplicate PAN cards, which impact the quality of data in the ATS. However, work is on to clear this mess.

However, the problem is that the number of assessees and the amount of tax collections have gone up exponentially while the emphasis of government policy is still on reducing government jobs.


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