The numbers are indeed creditable, but it is debatable if the credit really goes to better tax recovery. Starting salaries in the tech and BPO sector are so high that lakhs of youngsters go straight into the higher tax brackets on joining the work force. In the organised sector, 100 per cent salary increments through job migration are also common. Add to this, the profits from a three-year bull run in the capital market, a realty bubble and sharp growth in corporate earnings and you have a different perspective on increased tax collections. In fact, the usual classes of tax evaders who declare only a fraction of their income legitimately, or scamsters who are raking in money, continue to fly under the radar of the otherwise aggressive tax department.

On the efficacy of e-filing and benefits for individuals, our senior IT source says that and ECS facilities for getting refund cheques is available in several cities but has not picked up because people don’t understand MICR numbers. Sceptical about the claim, I checked and found that tax practitioners nor officials either did not know about the ECS facility or claimed it was inoperative due to technical snags.

However, in Mumbai at least, the demand for speed money to hand over refund cheques has declined. The efficacy of e-filing of returns is another contentious issue. Tax administrators believe that it actually reduces compliance costs. They argue that the ‘e-delivery of tax payer services’ project has enabled the “issue of over 5 lakh PAN cards per month, issue of over 39 lakh refund cheques for over Rs 29,000 crore every year, processing of more than 2 crore returns on system every year, and reduction of average processing time from over 18 months to 3-6 months”.

... contd.