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To curb fund misappropriation, govt. might gradually insist on online payment of most taxes

Though an online system for tax payment has been in place in local bodies for the past few years, a large percentage of payments from the public still happen manually, primarily due to database issues and lack of awareness about the system. The bypassing of the online payment system provides a leeway for corrupt officials to misappropriate funds, as it happened at the Thiruvananthapuram Corporation recently.

The State Government is currently ironing out issues in the online system and planning to bring about a system for mandatory online payment for taxes of large amounts.

KSEB’s example

It is learnt that the Government is planning to make it online payment mandatory for tax amounts above ₹10,000 or 15,000, and then progressively shift a majority of payments to online. Such a shift, after an initial mandatory push for bill payments of higher amounts to be made online, was successfully carried out at the Kerala State Electricity Board (KSEB).

The rolling out of the Sanchaya online revenue collection system, designed by the Information Kerala Mission (IKM) began in the local bodies around 2014. By 2018 or so, many local bodies had implemented the system, with the Thiruvananthapuram Corporation being one of the earliest ones to do so.

Database issues

However, right from the initial days, there have been issues with the database in many local bodies, with hardly any effort being taken up for data cleaning, to remove ambiguous or duplicate entries.

The problems were compounded following the tax revision exercise taken up in 2016. The building taxes till then were fixed at 18% of the annual rental value of the building, which was calculated on the basis of plinth area and land value. As per the new system, building tax was to be assessed on the basis of plinth area alone. These changes were not reflected in the database on time.

Though the online system was put in place, there was no push towards creating awareness among the public. Even now only about 20% of the tax payments happen online, according to officials at the Thiruvananthapuram Corporation. People now pay their taxes at the ward-level collection drives or at the offices. Though this gets entered in the daily collection register, it should also be entered in the online database, which might not happen in some cases. With the outbreak of COVID-19, and the entire focus shifting towards the pandemic, these systemic issues persisted, and worsened.

Not an easy task

Shifting the entire tax collection online is a complicated task as urban local bodies have five kinds of taxes, including property tax and professional tax, and 40 different kinds of fees including regularisation fees, application fees, tar cutting fees, vehicle rental payments, building rents, and land lease. Bringing these multiple levels of accounting and tax sources into a single integrated system is a tough ask.

But shifting the property tax, which makes up about 40% of the income of local bodies and the professional tax, which makes up 10-20% of income, could ensure that there is less leeway for large-scale fund misappropriation.