"The first phase of the Rs 240-crore (Rs 2.4 billion) Taxnet project to network all the 745 offices of the department in 510 cities across the country, being implemented by Airtel EnterpriseServices in partnership with IBM, has already been completed," Central Board of Direct Taxes Member J G Pendse said in New Delhi.

The second phase of the project connecting the remaining 450 cities would be completed by March-end, he said, adding that the department was also in the process of setting up a national data centre.

The national data centre project, estimated at Rs 500 crore (Rs 5 billion), had received bids from companies like TCS [Get Quote], Wipro [Get Quote] and IBM, he said.

When launched by June-end this year, the combined facility would enable online filings, faster processing of returns and reduction in time cycles for issuance of refunds, and increase the efficiency of collections, he said. Pendse brushed aside the idea that the project would result in confidential income tax data being leaked to private companies.