Arun Shah is facing a peculiar problem. His income tax returns have come up for scrutiny, but this time he is finding it difficult to wriggle out of the mess.
Surprisingly, the income tax officer has details of the farm he bought in Mehrauli for Rs 2.1 crore (Rs 21 million), and the Rs 700,000 spent on a new Baleno, obtained through a dealer in faraway Bhopal.
How did the taxman get these details? He had not quoted his PAN number for the purchases. Shah can't figure out what's happening.
Unbelievable as it may sound, this scenario is now possible, or will be within the next six months, thanks to a policy announced in the Budget for 2003-04, allowing a large part of the sleuthing necessary for the taxman to be outsourced.
A body with an all-India network, such as the National Securities Depository Limited, will build up a tax information network for the government.
All those who can provide information about consumer purchases -- credit card firms, automobile agencies, jewellers and land registry offices -- will send the information on a regular basis to the nearest NSDL office in their city, and NSDL will forward this to the tax authorities.
Welcome to the world of outsourcing of government work. The government is not sacking employees, or giving them golden handshakes, but is trying to farm out work that cannot be handled by the current staff.
In fact, the number of central government staff is set to rise from 3.42 million in 2002 to 3.51 million in 2003, and the cost of maintaining them from Rs 31,618 crore (Rs 316.18 billion) to Rs 33,036 crore (Rs 330.36 billion).
Tax authorities have employed data-entry firms to enter data for the approximately 250 million tax returns they have received this year.
In September, there were 280 million tax returns pending for assessment. Till now, after the returns were submitted, they had to be keyed in by department officials before they could be processed, and this led to unnecessary delay.
The Delhi sales tax department also gets non-government agencies to punch in sales tax data they receive from the 130,000 dealers who file this information annually.
The department of company affairs has begun appointing investigators to conduct audits and inspections, says Vinod Dhall, secretary of the department.
"We had 22 or 23 inspectors looking after 600,000 firms," explained Dhall. "The only way to deal with this was to appoint outside investigators. We have appointed three and are in the process of appointing another four or five," said Dhall.
The department has also asked corporate lawyer Shardul Shroff to head a committee examining the possibility of outsourcing routine inspections.
The department of company affairs is one of the first government departments to begin working with outside agencies.
It used to be flooded with complaints from people who could not get information on the 600,000 or so firms in India who are supposed to file information with the registrars of companies across the country.
The department, then, outsourced the service to the Mumbai-based Centre for Monitoring Indian Economy.
Today, CMIE's First Source is the one place where information on all registered companies in the country, whether largely or closely held, is available.
Dhall says the department of company affairs is working on expanding this kind of service, and is looking at e-filing systems.
A special purpose vehicle will be set up to do this, funded by the fees received for the service. The cost audit data collected by the department will also be available through this system after the names of companies have been filtered out.
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