Computerisation has become an essential element in practically all offices, but it is more so when it comes to effective implementation of value-added tax (VAT) both from the point of view of administration as well as from the point of view of the taxpayers. | |
| For taxpayers, manufacturers, dealers and ordinary shopkeepers, computers have become essential for the purpose of maintaining accounts, generating invoices, tax returns and for all other work relating to the payment of tax. |
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| Some of the important advantages of computerisation for the tax office are discussed below: |
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| Auditing is made easier and more effective by the use of computers. The computer is essential for allotting TIN to the taxpayers. It is also necessary for detecting stop filers, nature of offences committed in the same locality or in the same trade, and even similar offences committed anywhere else in the country. A master file for dealers can be created much more easily with the help of a computer. It is very necessary to have a master file for dealers to see the background, the amount of tax paid by them earlier, nature of offence committed, the nature of audit objections raised and so on. VAT register, which is a comprehensive account of registered dealers, revenue and all other details in a jurisdiction, can also be very properly maintained by a computer. Cross checking of invoices is fundamental to a successful audit. Matching of invoices""buyer's and seller's ""on any particular sale is a technique for uncovering tax fraud. If matching can be done by a computer, then the audit officer can concentrate on those cases, which are not matching (Malcolm Gillis, Carl S. Shoup, and Gerardo P. Sicat "" Lessons for Developing Countries, p.227 in Value Added Taxation in Developing Countries edited by Malcolm Gillis et al) VAT-compliant software produced by the manufacturers and dealers help in maintenance of documents and accounts, which can be done only by complete computerisation of office work. Compliance cost will come down with more and more use of computer since the computer prices are plunging and personnel costs are surging. |
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| Capabilities and capacities of the computers are rapidly increasing, and they require less supporting costs, such as space, air-conditioning, and electric power (Sol Dubroof "" Computerisation for VAT, p.58 in Value-Added Tax: Administrative and Policy Issues edited by Alan A. Tait, IMF). Prerequisites for computerisation are the following. The choice of hardware is very important. It should be compliant with other computers already installed in the office. The pace of change and the success of any modernisation programme will ultimately depend on human resources, that is, on the training and skills of the people who are expected to use and operate the technology. |
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| Technical expertise alone is not enough to assure success in application (Richard M Bird, Administrative Dimensions of Tax Reform, p.146, in Asia-Pacific Tax Bulletin, March 2004). Training of personnel is the key to successful implementation of any tax administration software. The following precautions should be taken for successful implementation of a computer program. The computer software should be made simple. If it is complicated, then not only will the people using it will find it difficult, but also the response time will increase which will make the whole system inefficient. Over-dependence on computer should also be guarded against. A computer is only a tool and it can deliver results only as much as the user wants it to. |
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| So in conclusion, it should be remembered that the efficiency of the VAT department does not depend on the number and extent of use of computer. It depends on the basic ability of the whole lot of staff and supervisory officers who use the computer just as a method for improving administration. Computer by itself does not do anything but only helps in doing. smukher2000@yahoo.com |
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