EQUIPPING FOR E-FILING
The e-governance project of the Government of India is taking concrete shape. Initially the Income Tax Department offered e-filing of TDS returns as well as income tax returns (for salaried tax payers). The Central Excise Department has also partly moved to e-filing. The office of DGFT few years ago started online filing of certain licenses. The income tax department is still struggling to take off and has faced numerous technical and non technical issues. The taxpayers are paying increased costs and efforts. Even after a persistent working of about two years now, the discomfort of tax payers in filing tax returns have not reduced significantly.
The Ministry of Company Affairs (MCA) has embarked upon an ambitious and massive MCA 21 project to make mandatory e-filing of all forms, papers, applications and documents with Registrar of Companies (ROC), Regional Directors as well as with the Ministry. Most of the forms are to be mandatory certified by Chartered Accountants and other practicing professionals. This project is faced with severe initial systemic and implementation issues marred with deficiency at this point in time. The Government of India as well as Tata Consultancy Services, could not properly estimate the load, which the e-filing system is required to take. Some of the serious problems observed by the companies and Chartered Accountants include:
The MCA and TCS are aggressively and highly professionally working to solve the various issues troubling the corporate sector. However, lack of advance education, poor bandwidth and non-
cooperation by a section of government officials towards successful implementation have all added to the chaos. The Directors of the companies and professional signing various forms have to obtain Digital Signature Certificates (DSC). This is going to be mandatory by 30th June 2006. Even DIN are to be obtained by 30th June, 2006. Significant penalty is impossible for non compliance. This last date has to be extended by about 6 months, as the government, TCS, professionals as well as corporates are not fully geared up. The current certifying authorities, certifying DSC are charging hefty fees and the government needs to play a facilitating and regulatory role so that the DSC are available at a reasonable cost. Even a massive education campaign on the part of the government is necessary to educate about technical aspects of e-filing and security threats while using DSC. ICAI needs to come forward on most urgent basis to issue a guidance Note to the members who are required to verify various forms and documents, to guide them about verification procedures, due-diligence requirements as well as documentation to be retained. The practicing Chartered Accountants are spending a lot of time in verifying supporting documents while certifying electronic records with increased burden of costs inflicted through compliance by higher technical tools and fast changing operational environment for the profession. Adequate fee, based on time spent should be charged while keeping in view the possible professional liability, which may be attracted including future requirement of appearance before courts and other regulatory authorities to verify testified documents. Due diligence is a mandatory professional ethic. The Finance Ministry should consider exempting stamping of all electronic documents except certain exemptions where heavy revenue stakes may be identified. This can be done on the lines of exemptions given for transfer of de-mat shares. The Cost of collection of revenue by exchequer in such cases outweighs the reasonableness of the quantum of stamp duty. This step on part of the government will significantly reduce cost of governance, inconvenience and procedures. In case of non-exempted stamping cases, electronic stamping should be implemented without any further delay. The MCA should consider improving the
technology further by automating most of the back-office authorizations and approvals by the system itself. They can also plan to reduce the manpower by about 80% and utilize them for alternative usage in the government. The physical submission of papers relating to ROCs all over India could be authorized in any of the PFOs/ ROCs offices all across India so that all service requests could be transacted anywhere on a national basis. We congratulate the Ministry of Company Affairs to take such a big technological leap forward. This MCA 21 project once fully implemented and the various issues are addressed, can become an international benchmark. The Income Tax Department should take a lesson from MCA for a very advanced e-governance model as compare to a poor attempt on the part of Department of Revenue. To eradicate corruption, e-governance will provide about 90% solutions if implemented aggressively, vigorously and in a planned phased manner.
The Ministry of Company Affairs (MCA) has embarked upon an ambitious and massive MCA 21 project to make mandatory e-filing of all forms, papers, applications and documents with Registrar of Companies (ROC), Regional Directors as well as with the Ministry. Most of the forms are to be mandatory certified by Chartered Accountants and other practicing professionals. This project is faced with severe initial systemic and implementation issues marred with deficiency at this point in time. The Government of India as well as Tata Consultancy Services, could not properly estimate the load, which the e-filing system is required to take. Some of the serious problems observed by the companies and Chartered Accountants include:
- Heavy rush at physical front office forcing people to spend a number of days and long hours in long queues, including multiple visits and repeat submissions.
- Increased time in approval of name availability up to three weeks from the earlier benchmark of same day / 24 hours.
- Increased time for incorporation of companies to three to five weeks as compared to about three to seven days incorporation at the time of physical filing.
- Non-availability of ROC officials for solving problem of sorting out issues. Public dealing has been almost stopped at ROC offices. It is completely inappropriate to not to meet people when they are struggling with initial troubles.
- Non-registration of various forms electronically filed for several days and months.
- Track status module does not give any details except “WIP”.
- No committed time frame/ service delivery period benchmark observed.
- System and implementation issues.
- The master data including charges registered is not complete in case of a large number of companies. This has posed serious threat to title search and due-diligence exercise.
The MCA and TCS are aggressively and highly professionally working to solve the various issues troubling the corporate sector. However, lack of advance education, poor bandwidth and non-
cooperation by a section of government officials towards successful implementation have all added to the chaos. The Directors of the companies and professional signing various forms have to obtain Digital Signature Certificates (DSC). This is going to be mandatory by 30th June 2006. Even DIN are to be obtained by 30th June, 2006. Significant penalty is impossible for non compliance. This last date has to be extended by about 6 months, as the government, TCS, professionals as well as corporates are not fully geared up. The current certifying authorities, certifying DSC are charging hefty fees and the government needs to play a facilitating and regulatory role so that the DSC are available at a reasonable cost. Even a massive education campaign on the part of the government is necessary to educate about technical aspects of e-filing and security threats while using DSC. ICAI needs to come forward on most urgent basis to issue a guidance Note to the members who are required to verify various forms and documents, to guide them about verification procedures, due-diligence requirements as well as documentation to be retained. The practicing Chartered Accountants are spending a lot of time in verifying supporting documents while certifying electronic records with increased burden of costs inflicted through compliance by higher technical tools and fast changing operational environment for the profession. Adequate fee, based on time spent should be charged while keeping in view the possible professional liability, which may be attracted including future requirement of appearance before courts and other regulatory authorities to verify testified documents. Due diligence is a mandatory professional ethic. The Finance Ministry should consider exempting stamping of all electronic documents except certain exemptions where heavy revenue stakes may be identified. This can be done on the lines of exemptions given for transfer of de-mat shares. The Cost of collection of revenue by exchequer in such cases outweighs the reasonableness of the quantum of stamp duty. This step on part of the government will significantly reduce cost of governance, inconvenience and procedures. In case of non-exempted stamping cases, electronic stamping should be implemented without any further delay. The MCA should consider improving the
technology further by automating most of the back-office authorizations and approvals by the system itself. They can also plan to reduce the manpower by about 80% and utilize them for alternative usage in the government. The physical submission of papers relating to ROCs all over India could be authorized in any of the PFOs/ ROCs offices all across India so that all service requests could be transacted anywhere on a national basis. We congratulate the Ministry of Company Affairs to take such a big technological leap forward. This MCA 21 project once fully implemented and the various issues are addressed, can become an international benchmark. The Income Tax Department should take a lesson from MCA for a very advanced e-governance model as compare to a poor attempt on the part of Department of Revenue. To eradicate corruption, e-governance will provide about 90% solutions if implemented aggressively, vigorously and in a planned phased manner.
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