Financial Daily from THE HINDU group of publications
Wednesday, Sep 22, 2004
Industry & Economy
Info-Tech - E-Governance
ICICI Info consortium bags VAT panel deal For tax information exchange system
Mr Manoj Kunkalienkar (left), Executive Director and President, ICICI Infotech Ltd, with Mr Ramesh Chandra, Member Secretary, Empowered Committee of State Finance Ministers, at a press conference in the Capital on Tuesday. - Kamal Narang
New Delhi , Sept. 21
SALES tax administrators and fiscal policy makers can, in the coming months, look forward to more reliable data on inter-State transactions.
For the first time, States have agreed to share with each other the basic information on sales tax that is available at their end.
The Empowered Committee of State Finance Ministers on Value Added Tax (VAT) has awarded the contract for roll out of a National Tax Information Exchange System (TINXSYS) to a consortium led by ICICI Infotech Ltd.
The TINXSYS project would primarily facilitate information exchange between sales tax departments across the country and establish a database for all inter-State transactions. It would also provide a platform for dealers to verify the validity of registration numbers of counter-party dealers.
The project would be implemented on a build, own, operate and transfer (BOOT) basis over a period of 5 years. It will cover all States and Union Territories and would be completed in two phases.
The first phase involves pilot implementations in seven States (West Bengal, Karnataka, Kerala, Delhi, Punjab, Haryana and Assam) over the next seven months.
The remaining States and Union Territories would be covered in the next nine months. The entire project is expected to go live in the next 16 months.
The contract to ICICI Infotech was awarded after a tendering process in which a TCS-led consortium and a Wipro-led consortium also participated.
Announcing the appointment of ICICI Infotech as the managed service provider for TINXSYS, Mr Ramesh Chandra, Secretary, Empowered Committee of State Finance Ministers on VAT, made it clear that this project had nothing to do with the implementation of the proposed VAT system.
States are gearing up to implement a VAT regime that would replace the sales tax system from April 1, 2005.
"Whether there is VAT or no VAT, from April 1 next year, such an information exchange system is necessary for us. It would help in the verification and tracking of inter-State transactions and curtail the scope for tax evasion. One of the reasons for under development of the tax system is the absence of reliable data. TINXSYS would help in construction of a database and generate requisite MIS reports for participating States," Mr Chandra said.
He pointed out that many sales tax administrators are even today not very sure whether they are getting a "fair share" of what is due to them from inter-State transactions.
Mr Manoj Kunkalienkar, Executive Director and President, ICICI Infotech, told newspersons that the value of the project would be between $5-7 million.
He also said that Bharti, as a consortium partner, would provide networking component for the project.
"This project is very special for us as it is of national importance. Other than the agreed $5-7 million, there would be no other revenue stream for us. It is our vision that one day the system that we build would become a backbone for commercial taxes in India and integrate with various commercial systems across the country," Mr Kunkalienkar told Business Line here.
He also said that the proposed system is to be built on an open architecture and therefore can be adjusted to factor in future decisions relating to implementation of VAT and phasing out of central sales tax.
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