The Central Board of Direct Taxes (CBDT), India launched electronic filing of income tax returns way back on August 8, 2003, started gaining ground. Under the scheme, salaried tax payers with Permanent Account Numbers (PAN) approach a designated bank with their tax challans or Form 16 and proof of savings, to get their tax returns electronically filed.
Currently, the scheme is restricted to seven cities, where a few banks are designated as intermediaries. Intermediaries prepare the return for a fee, and get it verified by a chartered accountant before electronically filing the same. Tax payers, thus, benefit from the convenient way of filing returns, with quicker processing time and speedy refunds, while accounting firms now have the ability to start moving away from a cumbersome paper environment.
The CBDT has done well in launching this scheme, which in some aspects is similar to that followed in the US. It is estimated that approximately 59.8 million returns will be submitted this year in the US through e-filing. This represents 45 per cent of the total number of individual returns filed with the IRS. Of these, tax professionals are expected to electronically file approximately 41.32 million returns in 2004.
Technological advances have enabled US tax professionals to go beyond e-filing of returns. Accounting firms in the US and other countries meet the challenges of the future by focusing their resources on the most important functions and outsourcing other areas. Done properly, this avoids the pitfalls of the traditional solution (adding more people) while avoiding the downside of outsourcing (losing control). Being a truly full-service organisation is an intricately admirable goal but rarely possible. Upon analysis, being completely self-contained may not even be desirable for accounting firms. Service providers are now able to assist accounting firms to achieve the daunting task of preparing returns, thus giving them the ability to focus on providing value-added services to clients. This task is accomplished by using document imaging systems, remote processing tools and secure environments to gain access to source documents and prepare tax returns on behalf of the firms.
Outsource Partners International (OPI) has been providing tax co-sourcing solutions to accounting firms in the US for the last three years. A successor to KPMG LLP’s outsourcing national practice, OPI is devoted exclusively to finance and accounting and tax returns processing services. OPI’s tax co-sourcing solutions allow firms to partner with OPI to run their tax department’s processing function, including the entire tax return cycle. OPI’s tax professionals at its facility in Bangalore process a wide variety of federal, state, and local returns in individual, business and trust categories. Firms have access to electronically competed returns as well as digital work papers, making filing of returns and the ultimate storage of information substantially easier. Electronic filing of individual returns in India may be in a nascent stage, but given India’s technological capabilities, it is only a matter of time before the process is expanded across the whole country and made available to all categories of tax payers.
This will benefit not only a tax payer with easier filing options and quicker refunds, but will also be the launching pad for accountants to be able to strategise their tax practice and focus on providing value-added services to their clients. The author is president of Outsource Partners International, Inc, a leading US-based business process outsourcing firm specialising in finance and accounting and tax return processing services. OPI has more than 600 associates operating through six offices in the US and its shared services centres in Bangalore, India and Dallas, Texas Financial Express