Computerization of VAT in the State of Himachal Pradesh – Department of State Taxes and Excise, Himachal Pradesh

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Case Study

Himachal Pradesh Overhauls VAT System Through Computerization

Introduction

The Department of State Taxes and Excise of Himachal Pradesh is committed to promoting economic and social development of the state by way of efficient Tax Administration to nurture a thriving business environment.

Problem

Prior to this project being introduced, revenue was collected manually. This process was inefficient and faulty. It was found that numerous revenue leakages were occurring as a result  of the same. The existence of and reliance on multiple manual intervention points meant that it was difficult to track different transactions and there was no transparency and accountability in the system. The lack of a monitoring system was sorely felt. Without being able to monitor processes there was no way to ensure compliance of revenue-related laws.

Solution

25 modules were developed to onboard all taxpayer-focused Acts and Rules online. To supplement the same, a back-office app was developed for use by the staff and officials of the department. Infrastructural development was also undertaken to help the computerisation process. A Data Centre was created, WAN connectivity prioritised, etc., as part of infrastructural changes. In order to achieve maximum output efficiency, regular training programmes and workshops were arranged to build capacity amongst the officials, officers and various stakeholders. Integration with 4 nationalised banks and the Cyber Treasury of the state was done in order to enable online tax payments.

Outcomes

As a result of these system upgrades, revenue has increased by 33.59% within the first year of the project being rolled out. The introduction of e-Services like e-Payments, e-Registrations and e-Returns have done away with the need for physical interactions and manual procedures. Taxpayers no longer need to make in-person visits to be able to complete these processes. Lines at 37 check points in the state of Himachal Pradesh have decreased because of the introduction of the new check post module. The comupterisation of departmental processes has reduced the use of office stationary, which has resulted in a significant drop in office expenses. A unified system has been developed for multiple types of taxes, including CGCR, CST, Excise Functions, LT, PGT and VAT.

Challenges

A lot of communication and coordination with other departments like BSNL and IT Department was needed in order to get the system upgrades underway. Bringing taxpayers and department officers and officials onto the new system proved challenging initially. Capacity building had to be prioritised to help officials adapt to the new system. Given the hilly terrain of the state, an extra effort had to be made to ensure that the system was not affected by adverse weather conditions.

Innovation

Even though similar efforts have been rolled out in other states, this project is the first of its kind in India wherein a single project incorporates functions for several different kinds of taxes, including CGCR, CST, Excise Functions, LT, PGT and VAT. The centrally, digitally-signed statutory forms are deposited directory into the taxpayers’ portal without the involvement of any intermediary authority. The system has been linked to four nationalised banks as well as the cyber treasury of the state to facilitate e-Payments.

Opportunities

The project is easily scalable and replicable, which means that it can be adopted by other states and their Revenue Departments as well.

Summary

The project has worked hard to better tax laws compliance in the state, computerise VAT administration and associated processes and develop a dynamic Management Information System (MIS) that can be used for more effective policymaking and decision-making. 

For more information, please contact:
Mr Yunus, Commissioner of State Tax and Excise, Himachal Pradesh at etc-hp@nic.in

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