Centralised Processing Centre

Income Tax Department

July 2012
INITIATIVES OF IT
DEPARTMENT
• E- GOVERNANCE OF TAX ADMINISTRATION

• CPC, BANGALORE – Centralised Processing of ITRs

• CPC, BANGALORE – E Filing

• CPC, TDS , DELHI – Centralised Processing of TDS

Returns (Commencement in Q3-4 FY2013)
Key Achievements of CPC
• Unique financial & Strategic partnership model
• Project kick started within aggressive timelines
• Over 2.4cr returns processed across four assessment years
• Over 90 lakh refunds generated & sent with minimal assessee
interaction with the ITD
• Over 1.5 lakh refunds reprocessed and sent
• Over 6.8 lakh rectification requests processed within timelines
• Call Centre capable of handling 4000 calls/day and over 8 lakh calls
handled so far
• Several assessee awareness campaigns directly or through
multimedia, to key stakeholders
Key Outcomes
• Faster Processing – reduction of cycle time
• Average processing time down to less than 2 months
• Quality Processing – Lesser scope for rectifications
• % of rectifications down to about 3%
• Speedy Refunds – Savings on Interest, Infusion of Liquidity into the
System
• Less Litigation
• Standardised processing
• More transparency
Paper Based Governance
to E Governance
• SHIFT ENTAILED CHANGE IN SITUATION FACED BY ALL
• UNCERTAINITY CERTAINITY
• CHAOS ORDER
• NON STANDARDISATION STANDARDISATION
• NON COMPLIANCE COMPLIANCE
• OPAQUE TRANSPARENCY
• LACK OF ADHERANCE TO TIMING TIMELINESS
• CONFUSION CLARITY

OVERALL MOVE FROM A LOSE-LOSE to

WIN WIN SITUATION for Assessees, the ITD,
the CAs & Tax Practioners and the Society
at large
Win – Win Situation for all Stakeholders
• QUALITY PROCESSING = F{CLEAN (ITR, FORM AND DATA BY
ASSESSEE, TRANSMISSION OF TAX CREDITS ,BUSINESS
RULES,TRANSPARENT PROCESSING,CORRECT ARREAR
DEMAND)}

• PRE REQUISITES FOR A WIN- WIN SITUATION

• CLEAN Return
• CLEAN and fast transmission of tax credit
• CLEAN Tax forms & data
• CLEAN and clear business rules
• CLEAN and transparent processing
• CLEAN Arrear Demand
• CLEAN and clear details for sending refunds
Initiatives taken for redressal of issues
• Data Level
• Form Level – 22 changes suggested
• Business Rules – 7 rules changed, suo moto rectifications done,
• Tax Issues
• Arrear Demand
• Suo Motto Rectification – over 4 lakhs cases taken up for rectification
• Refund failure and Refund reissue
• Better Communication
How CAs can help
• Use of Extensive reach of ICAI to communicate to assessees
• Timely feedback on issues
• Periodic Interface between ICAI and CPC
• Tax Payer education
• Help in Standardisation of Utilities
• Prevention of Refund scams, Tax frauds, Identity theft etc
CPC Plan of action for FY2013
• Timely Processing - AY 2012-13 over 2 crore E-returns
expected to be filed

• Process and issue all refunds in ITRs 1,2,3,4,4S by December

2012

• Process and issue all refunds in ITRs 5,6 by March 2013

• Complete Suo Motto rectification of past Assessment years

•
• Clear all rectifications in a timely manner

• Clear all refund reissues in time

• Collect all actionable demands raised at CPC and the field

Key Challenges
What does CPC do?
Receipt and validation of ITR
V Warehousing of ITR V and
Scanning of all paper other paper documents
documents including ITR V received at CPC

Data processing using

E filing of ITRs by assessee the Rules Engine,
Receipt and Loading of ITR Computation of Tax
data for processing Liability

Invoicing of Refunds,
transmission to Refund
banker Matching Tax Liability with
Accounting
Tax paid by Assessee
Generation and Transmission
of Intimations

Tax receipts data from

Posting of Arrears, NON CPC
processing data OLTAS, 26AS
 Key issues & their impact
Key Issues Impact Remedy planned
Uncertified Utilities Wrong computation, wrong Certification of Utilities by ITD
data flow

Data Entry issues in Defective returns, delay in Validation while E filing, Intimation to
Computation Schedules/ processing assessee seeking clarification, facility
Mandatory fields omitted of refiling of return with corrected
data
Incorrect tax / TDS claims Tax Mismatch Further strengthening of processing
system, use of pre populated fields

Data transmission issues from Tax mismatch Reconciliation of data flow at various
OLTAS, 26AS points

Data Entry issues in Post Inability to send out refunds, Introduction of mandatory fields, use
Processing Schedules Eg., intimations, reminders of pre populated fields
Bank A/c, MICR, Address,
email ids, Mobile nos
Non receipt of ITR V, issues Return not taken up for Electronic signature
around that processing
Data inconsistency in Returns –
some common examples

• PAN -Name mismatch

• Gender Mismatch – The Gender provided in the return
does not match with that appearing in the PAN database.
• Tax computed but GTI (Gross Total Income) is nil or 0
• No Income details or tax computation has been provided in
ITR but details regarding taxes paid have been provided
and refund claimed
• Salary income not shown in Part B – TI, but TDS from
salary claimed
Data inconsistency in Returns –
some common examples

• Part A-P&L and Part A-BS have not been filled even though
Audited case.
• “No Accounts” section of P&L or BS has not been filled in
Non-Audited cases
• Depreciation claimed in Point 42 of Part A – P&L but
Schedule DPM /DOA not filled.
• Deduction claimed under Chapter VIA under sections 80IA,
80IB, 80IC, 80G but the relevant Schedules not filled.
Data inconsistency in Returns –
some common examples

• Brought Forward Loss has been claimed at Point 9 of Part

B TI but Schedule CFL (Carried Forward Loss) has not
been filled or year of loss is not filled
• ITR 4- The assessee has not filled Part A P&L or Balance
Sheet or both and gross receipts and has filled positive
value in Schedule BP serial no1
• ITR 4S has been filed but presumptive income u/s 44AD is
less than 8% of Gross Receipt or Sales turnover and
under 44AE is less than Rs. 5000 p.m. per vehicle in case
of heavy vehicles or less than 4500 p.m. per vehicle in
case of other vehicles.
Data inconsistency in Returns –
some common examples

• ITR 4S has been filed by professionals (Code mentioned

under Nature of Business is 601 or 602 or 603 or 604)
• Use of wrong SI code in Sch- SI in respect of capital gains.
(ex. LTCG without proviso in the CG schedule shown as SI
code 22 in schedule SI instead of code 21.) System treats
them as different incomes.
• Provision of tax not debited in Sch-P&L , but shown as
debited in Sch-OI (item 8)
• Wrong status code in ITR-5
• Schedule MAT/MATC not filled properly in ITR-6
Processing Challenges
Tax Credit Mismatch Issues
• Tax Credit Mismatch issues
• Major reasons for mismatch
• Tax Mismatch – Over 100k cases taken up, some more
in the pipeline
• Delay in filing of TDS returns, post processing data flow
• Need for tight control over data flow issues
Reasons for TDS
Mismatch
Mismatch Possible reasons for Mismatch Steps to avoid Mismatch
relates to

TDS TAN of deductor / collector wrongly quoted in Furnish the correct TAN Number of the Tax
the return filed by assessee Deductor/ Collector in the return of Income

TDS relating to salary wrongly indicated by Use appropriate Schedules in the Return to
assessee in the TDS Schedule for other than report TDS on Salaries, and TDS on Incomes
salary or vice-versa other than Salaries.
TDS /TCS aggregated under one TAN Number Indicate the TDS/TCS amounts effected by each
even though TDS / TCS effected by several Deductor/ Collector separately in the Schedules
Deductors/ Collectors provided in the return of income

TDS /TCS return not uploaded by the Deductor Tax Deductor / Collector may be requested to
/ Collector upload the e-TDS returns for the relevant
quarter.
TDS/TCS returns uploaded by the Deductor/ Tax Deductor / Collector may be requested to
Collector without quoting assesseer PAN or correct the mistake in the e-TDS return and re-
wrongly quoting assesseer PAN upload the same.
Reasons for tax
mismatch
Mismatch Possible reasons for Mismatch Steps to avoid Mismatch
relates to
Advance BSR code of the bank branch / challan Pl ensure that BSR code of the bank
Tax / Self- serial number/ date of payment/ branch / challan serial number/ date of
Assessme amount paid stated in return does not payment/ amount paid as stated in
nt tax match with information in 26AS. return matches with information
available in 26AS.

Advance Tax /Self Assessment Tax Use appropriate Schedule in the Return
Payment particulars filled up wrongly in to report Advance Tax /Self Assessment
the Schedules meant for TDS/TCS or Tax Payment particulars.
vice versa
Mistake in PAN, Assessment Year etc. Furnish the correct particulars to the
committed while preparing the challan. bank branch where challan was paid and
request for uploading corrected challan
data to NSDL.
Processing Challenges –
Arrear Demand issues
• Several lakhs arrear demands, some older than 20 years
uploaded by AOs across India
• Over 30 lakh intimations sent to assessees across India
to available email addresses and where not available to
PAN Card addresses informing them of possible demands
against them
• All mistakes have been ordered to be corrected by the
CBDT.
• Rectification requests can be filed for set off once the books are
cleaned
• AOs authorised to close books and issue old refunds
Post Processing issues

• Refund erroring out

• At CPC due to (1.3% of refunds)
• Address validation issues – key fields not filled, too long, PIN Code not
filled, City, State field not filled
• Account details, MICR code not filled
• Account no validations not met;
• At SBI due to (3.4% of all refunds)
• Account no. mismatch (incorrect a/c no, details)
• Address issues
• House locked
• Party shifted
• No such address
• E-mail and SMS campaign taken up
Refund Reissue
• Average time taken at CPC less than 10 days, now faster
• 30% of reissue requests continue to be rejected;
• Key reasons:
• Cancelled cheque not attached for change in bank details
• Mismatch in data between the response sheet and cheque
attached
• No signatures in response sheet
• Address not updated (has dropped because of efiled requests)
• Earlier refund under processing
Rectification issues
• Awareness of data entry issues
• TDS Schedules, TAN Nos continue to remain unfilled
• Wrong TAN Nos
• Issues around filling of schedules for depreciation, carry forward of
losses, Schedule IT
• Technical factors which delay rectification
• Pendency of action for any other AY
• Pendency of an earlier rectification for same AY
• Transfer of rectification to AO
• When revised return is with AO
• Case is selected for scrutiny
Major reasons for rejection of
rectification request
• GTI Change
• Credit for TDS / AT / SAT was not allowed as there was no collections in the
Collections Report. Corresponding schedules not filled / incorrectly filled.
• Depreciation disallowed as assessee has not filled Schedule DEP.
• Loss from Schedule HP disallowed as corresponding schedules are not
filled
• Brought Forward losses disallowed as Schedule CFL / BFLA not filled.
• Deductions under section 80G/ 80P disallowed as Schedule 80G not filled /
assessee is not Co-Operative Society or Co-Operative Bank.
• Deduction u/s 80IA / 80IB / 80IC disallowed as corresponding schedules not
filled / Return filed after due date.
• Section Code wrongly mentioned by the assessee in Schedule SI.
• Additional claim of BFLA / VIA in rectification.
• Gender Mismatch / Residential Status / Due Date wrongly mentioned by the
assessee.
Business Rule Modification
and Form level Changes
• Business Rules modification for accurate processing

• Many Form level changes suggested by CPC incorporated

in the ITR s of AY 2012-13
Business Rule changes
• To prevent interest u/s 234B and 234C in 44AD cases (ITR
4S)
• To prevent automatic substitution of salary in Part B-TI with
salary in Sch TDS-1 if the latter is higher (ITR-1)
• To allow set-off of brought forward non-speculative loss
aginst current year’s speculative income
• To allow refund to Legal Heir
• To allow carry forward of TDS claims in certain cases (AY
2012-13)
Form Level changes (AY
2012-13)
• Break-up for deduction u/s 80G
• Additional information in Sch-HP relating to co-owners
• Seggregation of clubbed deductions in Sch VI-A
• Changes in Sch MAT to take into account profit after tax
• Change in Sch MATC for correct computation of surcharge and
Education cess
• Break-up of LTCG (proviso and non-proviso) in Part B-TI
• Changes to Sch BFLA to reflect speculative loss and loss from owning
and maintaining race horses.
• Additional details of 44AE income
• Adding back of “Income from specified business” in Schedule BP
• Partner/Member information in ITR-5 – Additional information
Operational Highlights
AY2011-12 almost through; gearing up for AY12-13
Monthly Production
2,500,000
ITRS processed

2,000,000

1,500,000

1,000,000

500,000

0
Mar-10
Apr-10
May-10

Jul-10

Mar-11
Apr-11
May-11

Mar-12
Apr-12
May-12
Feb-10

Oct-10

Feb-11

Jul-11

Oct-11

Feb-12
Aug-10
Sep-10

Nov-10
Dec-10

Aug-11
Sep-11

Nov-11
Dec-11
Jan-10

Jun-10

Jan-11

Jun-11

Jan-12

Jun-12
AY08-09 AY09-10 AY 10-11 AY 11-12

Average Processing time

250

200
No of Days

150

100 197
50
65 42
-
AY09-10 AY10-11 AY11-12

2
9
Rectification Requests
trends
GRADUAL DROP IN REQUESTS
AS A % OF RETURNS RAPID DISPOSAL OF
PROCESSED RECTIFICATION REQUESTS
4.50 4.26 7.0%

4.00
Total Backlog
5.9% 3.67 6.0%
No of Rect requests + Suo Moto initiated

160,000
3.50
140,000

% to total returns processed

5.0%
3.00 120,000
2.76

No of cases
4.2% 100,000
2.50 4.0%
3.7% 80,000

2.00 60,000
3.0%
40,000
1.50
2.0% 20,000

1.00 0

1.0%
0.50

Total Backlog
0.00 0.0%
AY09-10 AY10-11 AY11-12

Valid Rect Requests + Suo Motu

% of total returns processed
Refund Update
As of 31st May AY 2009-10 AY 2010-11 AY 2011-12 Total
No of Refunds Generated 1,277,952 3,127,790 5,012,808 9,418,550
Errorred at CPC 78,318 107,241 68,883 254,442
WIP 3,123 43,498 420,286 466,907
Sent to SBI 1,196,511 2,977,051 4,523,639 8,697,201
Errored at SBI 107,801 174,591 172,413 454,805
Despatched by SBI & Refund paid 1,088,710 2,802,460 4,351,226 8,242,396
Total Errored out cases 186,119 281,832 241,296 709,247
Errored out as a % of total refunds 14.6% 9.0% 4.8% 7.5%

Total Reissue requests received 124,919 97,700 68,198 290,817

Total Refunds reissued 71,610 50,464 46,087 168,161
Total Requests rejected 53,088 46,946 21,543 121,577
Rejected as a % of total requests 42.5% 48.1% 31.6% 41.8%

Huge challenge in terms of data quality / assessee awareness

ITR V – Needs resolution
• ITR Vs not received
• AY10-11 – 2.32 lakhs
• AY11-12 – 15.49 lakhs
• Out of this if all the pending ITR Vs were received within 120 days, this
totals to 7.40 lakhs;
• Which means 11.6 lakh ITRs are already overdue > 120 days
• AY10-11, cant even file belated returns
• Only 15% digitally signed in AY11-12; rising but not enough

• Speed Post – 2-3% error rate. Has been escalated to the India Post

• Long Term resolution, to get ride of ITR Vs through an electronic

signature mode
CPC has pioneered several new services to raise
CSAT

• Reminders & Campaigns

• ITR V – 30/60/90 days, now using SMS
• E filing of rectification
• Streamlining refund reissue requests
• Arrear demand information campaign, still ongoing
• Very soon refund reminder campaign
• Call Centre with trained employees
Planned enhancements
for Customer Service
• Demand / Adjustments that is accounted in the ITD to be displayed
to the assessee through “My Account”
• All the orders/communications passed by ITD to be made available
in “My Account” of e-filing portal
• Intimation u/s 143(1) to show reasons to the key variations in the
computation
• Pre populate the return with data like registered Name of assessee,
gender, date of birth and Tax credits in 26AS etc. at the time of
filing, to avoid mismatch in the information
• Communication of reason for transfer when case is transferred to
AO for processing
Do’s & Dont’s
• File the return on time – belated returns prevent filing of revised returns, if needed
• Pls use duly authorised software to file returns
• Fill all relevant details, however trivial it is believed to be, particularly email address,
mobile nos (mandatory now), etc which facilitate communication
• Pls check for ITR Vs status – over 20 lakhs remain pending over (6 lakhs overdue)
• Acknowledgement sent by CPC
• Call Centre
• E filing website
• Pls review and send all pending ITR Vs for AY11-12
• Arrear Demand
• if arrear is from return processed by CPC, file for rectification
• If arrear is generated by AO, pls meet the concerned person for resolution
• Tax Mismatch
• CPC alive to challenges; However pls check 26AS
• CPC will rectify suo motu wherever data flow issues are identified; However if TDS return in filed by deductor
post processing, pls E-file for rectification
• Pls file TAN No. of deductor, amount, date, challan type etc correctly
• Refund Reissue
• Pls send cancelled cheque for all bank account changes; For all other changes, on line request may be used
Dos and Don’ts
Overall, please use the Call Centre
Facility check out details / status before
raising grievances

Please call 1800 425 2229

 Over all we believe CPC is clearly in Phase II of its
existence within 2 full years

1. Focus on processing about 1.8cr returns in FY12-13

2. Making sure that the 3-4% of impacted cases due to
mismatch, Arrear Demand etc continue to be redressed
quickly
3. Speed up rectifications from the current average of 3-4
months to 1-2 months or lower
4. Use of SMS to bypass email issues and reach out to
assessee
Thank You