Title : Commercial Taxes - Mission Mode Program

Description

The Commercial Taxes Mission Mode Program (CT-MMP) is an initiative launched by the Union Ministry of Finance to standardize commercial tax administration across States and Union Territories and to introduce a bouquet of rationalized citizen-centric and service-oriented processes. Conceived under the National e-Governance Plan, the ICT-driven initiative is being implemented in the public-private partnership mode.

Client Name : Ministry of Finance, Government of India

Client Type : Central Government

Start Date : 22nd June, 2006

End Date : 19th December, 2006

Workshop on Commercial Taxes Mission Mode project held at New Delhi, May 2007

Project Description

As part of the project, the National Institute for Smart Government (NISG), in association with private partners, Ernst & Young, undertook to provide the ministry's department of revenue consulting services to conceptualize, architect and define the Mission Mode Project, considering present and future service offerings.

The overall task includes reorienting functions, processes, people, technology and resources. Central to the designing exercise is an integrated ICT-enabled system that will standardize commercial tax administration across the country and foster a citizen-centric and business-friendly environment. In particular, M/s Ernst & Young were involved in:

  • Developing a strategy and a roadmap for the CT-MMP
  • Designing an appropriate enterprise architecture
  • Making capacity building and change management plans
  • Presenting funding and resource options

Project Genesis

India is committed to introducing Value Added Tax (VAT) across the country in line with the principle of fiscal federalism. Most States and UTs have started aligning their processes with the VAT system, which was adopted on April 1st, 2005.

The basic design principles for VAT were laid down in the White Paper on VAT published by the Empowered Committee of State Finance Ministers, but States and Union Territories have opted to implement VAT in accordance with local conditions. While sticking to the basic design, they have individually drafted varying sets of VAT Act, Roles and Business Procedures. This has resulted in lack of uniformity in the administration of VAT.

As commercial taxes form the most important revenue base for States and Union Territories, currently accounting for 60-70% of the total internal resources generated, certain quarters articulated the need for standardized commercial tax administration that would plug loopholes and a foster a citizen-centric dispensation aimed at better compliance.

The CT-MMP is a step in that direction. The Government of India's Department of Revenue, which triggered the project, is also implementing it through the good offices of NISG.

Vision

"To create a modern state tax administration that is Efficient, Effective and Equitable and which is conducive to investment, economic growth and free flow of goods and services within the common market of India."

Objectives

The CT-MMP is aimed at creating nationwide infrastructure that would facilitate inter-state trade, ensure uniformity and standards in commercial tax administration, and enable free exchange of information. The emphasis will be on using ICT to improve the delivery of public service and strengthen the government's revenue base.

Stakeholders for the project

The CT-MMP will impact the following:

  • The Department of Revenue, Ministry of Finance, Government of India
  • Commercial Tax Department of the States/UTs
  • Finance Department of the States/UTs
  • Dealers and Vendors
  • Legal Department

Services provided by the project

Basically the project envisages:

  • e-Governance initiatives to enhance service delivery
  • Re-organization of tax departments along functional lines
  • Enhanced revenue forecasting capabilities
  • Industry-based classification of dealers
  • Faster processing of VAT refunds using a risk-based approach
  • Visibility to dealer ledger
  • Enhanced TINXSYS for online tracking of inter-state trade

Once implemented, the services to be provided under the CT-MMP from the standpoint of the taxpayer include:

  • Registration of dealers
  • Collection of returns
  • Collection of taxes
  • Provision of refunds
  • Tax accounting services
  • Issue of forms pertaining to inter-state trade
  • Information services, taxpayer education and guidance

Implementation detail

The consultants were expected to adopt a holistic approach to shape the CT-MMP with focus on Process Reform Management, Resource Management, Procurement Management, Technology Management, Expectation Management, Program Management and Knowledge Management. In particular, the roadmap was expected to address key questions like: What, Why, How, When, Where and Who for all the seven dimensions.

The key considerations that were to serve as guiding principles were:

  • Focus on core business processes that are to be reengineered with a service-oriented approach so that there is transformation in commercial tax departments
  • Look at uniform architecture and standards that can be harmonized with differing levels of ICT initiatives taken in States and UTs
  • Come up with a change management strategy that will address possible resistance in the commercial tax departments and existing business-unfriendly atmosphere
  • Propose a business model that will enable public-private partnerships to fund a part of the estimated Rs 750 crore required to modernize the commercial tax department across the country, with public investment accounting for the remainder
  • Bridge gaps in individual and institutional capacities through appropriate training programs and sensitization seminars targeting various stakeholders

As per the terms of reference, the consultants studied the commercial tax systems of Delhi, Andhra Pradesh, West Bengal and Gujarat.

Following the study, the consultants came out with the following specific work products:

  • Roadmap for implementing the CT-MMP, with emphasis on vision, mission, service prioritization, program management and governance structure & mechanisms, stakeholder expectations, risks and risk management guidelines, and critical success factors
  • International/national best practices along with their applicability and usability in the context of CT-MMP - best practices for program management, governance, processes for management of commercial tax functions, technology architecture, service delivery, service delivery standards and channels for service delivery
  • Portfolio of services to be targeted under the CT-MMP - with description, breadth, depth, prioritization and service levels required to be achieved to meet stakeholder expectations
  • Reengineered processes - process descriptions, process metrics, expected impacts of these processes on stakeholders and on internal efficiencies, challenges in implementing them, governance structure for implementation and how the implementation plan has to be tied with IT infrastructure / applications

In their reports, the consultants made certain recommendations for implementing the CT-MMP. A workshop involving Commissioners / Deputy Commissioners of the States was held in May 2007 to introduce them to the recommendations.

Current Status

All the deliverables under the project, which commenced on 22nd June 2006, were submitted by NISG to the Ministry of Finance on 19th December 2006. The States/UTs were advised to align themselves with the CT-MMP study and follow the recommendations. The States and UTs have been given the option to utilize funds available under e-Bharat for implementing the CT-MMP.

NISG has sent communication to States and UTs exhorting them to implement the recommendations of the study and take NISG's assistance if required.

Published On : 11th July, 2013