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Infosys, the Finance Ministry, and the Glithces in the New Income Tax Portal

Editor, TRANSFIN.
Aug 25, 2021 5:30 AM 5 min read
Editorial

Nobody likes Mondays, but Salil Parekh likely had a more unpleasant Monday than most.

On August 23rd, the Infosys CEO was “summoned” by the Ministry of Finance to answer for the continuous glitches in the new income tax (IT) e-filing portal (https://www.incometax.gov.in/). Ever since its launch in early June, the website has been the source of much taxpayer frustration and CA angst. And last weekend, the site became entirely unavailable for hours.

What New Portal?

In February 2018, the Government announced its intentions to revamp the existing income tax filing platform. This was a part of the Integrated E-filing and Centralised Processing Centre 2.0 Project (what’s that?).

From a technical viewpoint, the previous e-filing system was two-tiered, wherein TCS ran the e-filing process where the forms were submitted and analysed whilst Infosys managed the backend aka the central processing centre that checked the filings and processed the refunds. Under the new system, both these verticals were to be combined and managed by the same vendor.

In January 2019, Infosys was revealed as the winner of the ₹4,200cr ($566.8m) contract. The company immediately got to work to develop the “new taxpayer-friendly portal”.

The goal, primarily, was to reduce the time between processing returns and issuing any refunds from 63 days to just one. Sounds amazing, doesn’t it? Well, on paper, updates about the project did indeed sound exciting. Same-day refunds, free ITR preparation software, on-call taxpayer assistance, online payments, e-verification, linking Aadhaar with PAN... The Infosys design unit apparently awarded the up-and-coming site its “Best Project” award for 2019-20.

 

The Genesis of Troubles

Despite the hype and anticipation, the website was plagued by glitches and complaints ever since it was launched. These issues involved problems with login, passwords, past filings being inaccessible, missed submission dates, challans not being visible, TDS returns not being filed etc.

The day after the new portal's debut, Finance Minister Nirmala Sitharaman took to Twitter to highlight taxpayers’ complaints about the same, tagging Infosys co-founder Nandan Nilekani. Two weeks later, Ministry officials met with Infosys representatives and other stakeholders (auditors, consultants etc.) to discuss the issues with the platform. Infosys reportedly assured the audience that the portal’s glitches would be resolved within a week. But problems persisted. A few days later, the Institute of Chartered Accountants of India (ICAI) was called upon to form a seven-member task force to probe the technical issues.

Meanwhile, social media was flooded with criticism against Infosys and GoI. CAs highlighted how performing even the most basic tasks had become difficult on the updated website. Some even said they tried to file returns either early in the morning or late at night hoping that reduced traffic might help them get through.

Two days ago, the entire site went offline. Infosys tweeted that this was “due to planned maintenance”. It took nearly two days before users were able to access the platform again. This was when the Infosys CEO was “summoned”. The company has now been given until September 15th to fix the issues with the portal.

 

The Road to Snag-Town

The two-and-a-half-months-long mayhem of the new income tax portal wasn’t Infosys’s first tryst with debacle.

The Bengaluru-based company had previously also secured Government contracts for numerous other flagship projects, including the $50m revamp of the MCA portal and the $186m contract to develop the GST network. Both these ventures were infamously beset with performance issues.

How could Asia’s second-largest software services provider and one of the largest and most well-recognised companies on the planet have allowed these fiascos to happen?

Let’s look at the new IT portal specifically. Any project of such magnitude is bound to have a few hiccups along the way. But in this case, this project was being developed amidst a pandemic. Employees had to develop a platform destined to be used by hundreds of millions whilst abruptly having to adjust to working from home and coordinating with stakeholders via video conferencing. It was a whole new world - and when it comes to important projects whose success is critical, you might be safer if you keep experimentation to the minimum.

Throughout last year, Infosys remained confident of meeting deadlines. But by January 2021, its confidence had waned. In a meeting with GoI officials that month, it asked for more time. Officials shook their heads and said the June deadline had to be adhered to, whatever the cost. Infosys worked round the clock to get the portal up and running. But there were already warning signs. For instance, it missed the February deadline for deploying the system for testing.

FYI: In hindsight, the Second Wave of COVID-19 ended up cutting some slack for Infosys vis-a-vis the extended deadlines for filing IT returns for individuals (from July 31st to September 30th) and companies (from October 31st to November 30th).

The Government’s hands aren’t clean either. The project was afflicted with delayed sign-offs and payments from the start. As of June 2021, only ₹165cr ($22.23m) of the amount guaranteed to Infosys had been sanctioned. And while we’re at it, there’s something deeply unsettling about elected officials who often sing paeans about minimum government and the importance of a friendly business environment using words like “summoned” when talking about business leaders.

Moreover, many CAs question the need for a new portal in the first place. The old avatar, they opine, worked fine. In fact, it was one of the few Government websites that did. Why fix something that didn’t really need fixing?

Additionally, if you’re going to update a website used by millions of people, shouldn’t there be some contingency in place? For instance, allow the old website to also be functional for a stipulated period of time while users transition to the new one. Instead, the old website was taken down in a trice and replaced with the new one.

This has been an all-too-familiar saga of gaffes and blunders. And one that the economy can do without, particularly now. Despite the pandemic and widespread fears of a dip in tax revenues, IT collections as of June 21st 2021 had nearly doubled YoY. A faulty filing system might discourage the ongoing unexpected good run - which isn’t exactly music to the ears of our cash-strapped coffers.

FIN.
 

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