Taxpayers may soon start receiving refunds faster from the income-tax department. The cabinet on Wednesday decided to spend ?4,241.97 crore on a next-generation income tax filing system to reduce the time it takes the department for processing returns to just 24 hours from 63 days.

The system is expected to be in place in 18 months and it will be launched after three months of testing, Union minister Piyush Goyal said after a cabinet meeting.

The government has selected information technology firm Infosys Ltd to implement the project after a competitive bidding process.

“The turnaround time to process an income tax return will reduce from 63 days to one day. In case of rectification requests, the duration will also come down. We believe the number of rectification requests will also come down from the current 2% to 0.1%...We’ll be able to give more facilities to the taxpayer -- whether it is real time processing, grievance redressal or spreading awareness -- all through the digital medium,” Goyal said

Tax refunds worth ?1.83 lakh crore have already been issued in the current financial year, the minister said.

Chartered accountant Satyendra Jain said the move will benefit both the taxpayer and the government.

“It takes almost two years in getting refunds after you file your tax returns. This time will be significantly reduced. If returns are processed in just 24 hours, ideally, refunds should come to bank accounts of taxpayers instantly. It shouldn’t take more than a week,” he said.

The move will not only cut the government’s transaction costs that includes interest payments on late refunds, but also reduce the work load on staff currently engaged in processing tax returns, he said.

“This spare manpower can be better utilised in tax scrutinies and other important activities related to tax administration,” Jain said.

The Cabinet has also sanctioned a consolidated sum of ?1,482.44 crore for the existing Centralised Processing Centre-Income Tax Return [CPC-ITR] 1.0 project up to 2018-19, Goyal said.

He said the broad objectives of the project include faster and more accurate outcomes for the taxpayer and promoting voluntary tax compliance.

First Published: Jan 16, 2019 20:10 IST