Thursday, June 11, 2009

DRAFT CADRE RESTRUCTURING REPORT

REPORT OF THE COMMITTEE
ON
CADRE REVIEW OF THE INDIAN REVENUE SERVICE
&
RESTRUCTURING OF THE INCOME TAX DEPARTMENT
2009

Table of Contents
Chapter

Page
1

Executive Summary





2

Need for Review


2.1
Strategic Vision of the Income Tax Department


2.2
Objectives of Cadre Review


2.3
Recommendations of the Sixth Central Pay Commission & GOI Resolutions


2.4
Need for Review





3

Introduction & Background


3.1
The Present Economic Scenario


3.2
Constitution of the IRS


3.3
Organisational Chart & Hierarchy


3.4
Functions & Role of Income Tax Department


3.5
History of Cadre Review





4

Functional Requirements


4.1
Growth of Workload


4.2
Assessment
i. Workload Management Model
ii. Revenue Collection Model
iii. Expected Taxpayer Base Model


4.3
Appeals


4.4
Legal & Advocacy


4.5
Investigation & Intelligence


4.6
Directorates
i. Attached Offices of the Board
i. Subordinate Offices of the Board


4.7
New & Emerging Areas


4.8
Training


4.9
Reserves





5

Inter-Service Comparison


5.1
Timelines for Promotion
i. Pay Commission
ii. Recruitment Rules & DOPT Guidelines
iii. Actual


5.2
Threshold Analysis


5.3
Cadre Structure


5.4
Structural Ratios


5.5
Stagnation Ratio


5.6
Number of Posts Required as per Guidelines





6

The Proposal


6.1
Requirement on Functional Grounds


6.2
Requirement on Inter-Service Comparison


6.3
Recommendations


6.4
Matrix Showing Requirement & Deployment
i. Functional Distribution
ii. Implementation Schedule





7

Financial Implications


7.1
Implications


7.2
Matching Savings





8

Post-Review Scenario


8.1
Threshold Analysis Showing Impact of the Review





9

Non-IRS Posts in Income Tax Department





10

Summary of Recommendations





11

Annexures


11.1
The Cadre Review Committee & Terms of Reference


11.2
Meetings Held


11.3
Methodology


11.4
Sources


11.5
Glossary



EXECUTIVE SUMMARY
1.1
The Sixth Central Pay Commission had mentioned that despite being the largest Group ‘A’ service, IRS did not have a single Secretary level post and that the genuine service aspirations of the members of the service will need to be met. The present cadre structure of IRS does not have a single post in the two highest grades viz., the Apex scale and HAG+ scale. It also does not have any provision for reserves. It is an acknowledged fact that the IRS needs to have a well organised, strengthened and adequately manned cadre, that is suitably equipped with the means of effectively collecting increased revenues for Government, the wherewithal for providing efficient services to the taxpayers and to effectively plug the revenue leakages. In consonance with the recommendations of the 6th CPC and the DoPT instructions, a Cadre Review Committee was constituted by the CBDT on 13/12/2008. The Committee was mandated to review the cadre of IRS and restructure the Income Tax Department within the framework of Government guidelines to enable and equip the Department to meet the challenges of today and tomorrow.
The Committee held wide ranging discussions with all the stakeholders in the Department. After extensively looking into present and future role of the Department and taking into account the career aspirations viz-a-viz functional needs and the promotional avenues available in other similarly placed services, the Committee has made following major recommendations, briefly listed as under:-
Introduction of the Apex Scale and HAG+ Grade in IRS cadre by upgrading the posts of Chief Commissioner of Income Tax commensurate with the increased responsibility of the Chief Commissioners.
Administrative Commissioners of Income Tax and equivalent posts to be elevated to HAG (PB-4 plus Grade Pay of Rs. 12,000) commensurate with their increased span of control and to create a structure as per the 6th CPC.
Some additional posts to be created on functional considerations in other grades.
Reserve of 760 posts to be created in IRS cadre, as per the DoPT guidelines.
Ranges to have six assessing officers including 2 ACITs/ DCITs in Company Ranges and 1 ACIT / DCIT in other Ranges.
All DGsIT in HAG+ of Rs. 75,500 – 80,000 to be re-designated CCITs
An additional post of CIT to be created to look after the Budget and Expenditure related work related to the entire Department.
A special Committee to be constituted to consider the feasibility of placement of officers in embassies for investment facilitation and Tax advice to augment tax-revenues and meet the demands of the globalising economy. ( to be elaborated further through inputs from new areas)

2. NEED FOR REVIEW
2.1 Strategic Vision of the Income Tax Department
2.1.1 The overall vision of the I-T Department can be expressed in the following terms:
“To Promote Compliance with Direct Tax Laws through Professional & Responsive Administration and Standardized Quality Taxpayer Services Encouraging Voluntary Compliance.”
2.1.2 While tax policy and tax laws create potential for raising tax revenues, the actual amount of taxes flowing into the government treasury, to a large extent, depends on the efficiency and effectiveness of the revenue administration. Improvement in tax administration would seek to secure maximum tax revenue effectively and efficiently given the tax rates. Thus no tax policy can be successful unless there is an efficient tax administration. Weaknesses in tax administration could lead to inadequate tax collections. Experience shows (including experience from other countries) that how a tax system is administered affects the revenue yield, its incidence, and its efficiency. A weak tax administration could lead to uncertainty and, may be, shrinkage in budgetary resource envelope, thereby affecting the government’s ability to implement its policies & programmes and provide public services. So it may not be enough to undertake only tax policy reforms. It is imperative to simultaneously carry out tax administration reforms so that tax policies could be effectively and efficiently implemented.
2.1.3 Over the last decade or so, the consistent and high rate of growth of direct tax revenue is the result of a combination of reforms in tax policy and tax administration. Revenue collections due to tax reform measures (simplification of law, broadening of the tax base, etc.) have to some extent been neutralised by other measures like raising the exemption threshold, etc. The enhanced revenues can be directly correlated to higher tax effort and better tax administration. If we consider the tax elasticity as 1.4, a back-of-the-envelope calculation would suggest that close to 11 per cent increase in the tax receipts can be attributed to the growth in the economy (growth being about 8 percent per year). Since the inflation during these years has been around 6-7 per cent on an average, the increase in tax receipts due to the efforts of the tax administration can be roughly attributed to be around 8-10 percentage points. Thus, about 40% of the recent growth in tax collections can be attributed to the efforts of the tax administration.
2.1.4 While the present efforts at reforming the tax administration could continue, it is time to set higher goals and establish methods to achieve them. It is also necessary to explore ways to overcome the prevailing socio-economic limitations in order to achieve a more competitive fiscal environment at the macro level - an environment which encourages investment, risk-taking, entrepreneurship and provides increased jobs; an environment which provides transparency, predictability and certainty within the tax administration; an environment which lowers the cost of compliance; etc. No doubt some of these may require reforms in tax policy, but only tax policy reforms may not be enough. Unless reforms of the administrative dimensions of taxation, namely, how the tax policy is actually implemented are carried out, the desired outcome may not be achieved. Periodic Cadre Reviews are therefore necessary, and can be very effective tools for creating the manpower structures to drive and enable effective tax administrations.
2.1.5 The opportunity of cadre review this time is to build on the 2001 cadre restructuring exercise. The restructuring gave an organizational structure which has delivered on the enforcement compliance, even though, as would be seen from the succeeding portions of this report, the substantial growth in workloads, information and challenges have severely stretched the resources of the department’s cadres. The natural requirement therefore would be for this exercise to strengthen the delivery of I.T. services to the taxpayers so that it is professional, prompt, effective and of world-class standard.
2.2 Objectives of Cadre Review
2.2.1 As per the Monograph on Cadre Review published by DOP&T, the overarching purpose of Cadre Review is to ensure “congruence between functional needs and legitimate aspirations of the members of a Service. The main thrust of Cadre Review is on manpower projections and recruitment planning on scientific lines aiming at the same time at rationalisation of the existing cadre structure of a service in accordance with certain predefined principles and a given set of objectives like improving the efficiency, morale and effectiveness of the cadre.” Periodical review of cadre strength of a regularly constituted service is an important cadre management function as it plays a vital role in the smooth functioning of the service and in boosting the cadre prospects and morale of its members. The main objectives of Cadre Review, according to the Monograph, are as under:-
To restructure a cadre in such a way as to remove the deficiencies existing either at the time of its creation or subsequently so that the cadre structure satisfies the functional, structural and personnel consideration
To plan recruitment in such a way as to avoid future promotional blocks and at the same time prevent gaps from building up.
To estimate man-power requirements for next 5 years. This was also recommended in the 1969 report of the study team of Administrative Reforms Commission.
To examine the extent of different types of reserves that will need to be provided in case no provision exists for reserves.
2.2.2 The present cadre structure of IRS suffers from various anomalies. It has not been able to keep pace with the ever expanding role and increasing responsibilities of the Service and is no longer conducive to any increase in efficiency. It is also unable to meet the genuine career aspirations of the members of the Service.
2.3 Recommendations of the Sixth Central Pay Commission & GOI Resolutions
2.3.1 The Sixth Central Pay Commission in para - 3.3.35 of the report noted as under:-
“Despite the large cadre strength, the service does not have a single Secretary level post encadred in the service. This is clearly anomalous especially because this service is performing the important function of revenue collection. The Commission is aware that as a general policy, no recommendation regarding restructuring of individual cadres is being made. However, considering the fact that other group ‘A’ services with less than 1/10th the strength of Indian Revenue Service have more Secretary level posts, Government will have to seriously examine the issue and resolve the legitimate aspirations of the service.”
2.3.2 Proposals for Cadre Review were asked vide DOPT OM No. I-1019/6/2008-CRD dated 5/9/2008 in accordance with the provision contained in para 1(ix) of the Government of India, Department of Expenditure resolution No. 1/1/2008-IC dated 29/8/2008 issued pursuant to the 6th Central Pay Commission recommendations. Vide CBDT memo no HRD/CM/102/01/2008-09 dated 13th December, 2008, a committee on Cadre Review of IRS and restructuring of the Income Tax Department was formed with the following ‘terms of reference’:-
To make advance projections of requirements of personnel and to plan recruitment program on a scientific basis
To bring about rationalization of cadre structure with a view to improving efficiency and morale and enhancing the effectiveness of the service
There should be synergy and fit between strategic vision, mission, goals and manpower requirement
Organizational structure should emerge from operational requirements
These terms of reference emerge from the DOPT instructions on the objectives of the cadre review as below1:-
i) estimate future manpower requirements on a scientific basis for a period of 5 years at a time,
ii) Plan recruitment in such a way as to avoid future promotional blocks and at the same time prevent gaps building up,
iii) so restructure the cadre as to harmonise the functional needs with the legitimate career expectations of its members and thus
iv) to enhance the effectiveness of the service.
2.3.3 Recommendation made by the Sixth CPC regarding IRS in para 3.3.35 of the Report has already been mentioned earlier. In that para the Pay Commission had also mentioned the fact that ratio of Direct Taxes to GDP had gone up from 2.35% to 6% in the last 15 years and that the service was the largest Group ‘A’ service which, despite its large strength, was without a single Secretary level post. The position remains unchanged even now. Direct Taxes continue to grow as a percentage of GDP but the position is even worse in the service because it neither has any Secretary level post nor does it have any post in the immediately lower grade of Rs. 75,500-80,000. This is despite the fact that, as mentioned in para 1.3.25 of the Commission’s Report, the Direct Tax Revenues are poised to grow from Rs.2,29,272 crores in 2006-07 to Rs.6,35,053 crores in 2011-12. This growth would be possible and need to be be further facilitated by a streamlined cadre structure that increases the efficiency and motivates the officers to perform better.
2.3.4 The IRS Cadre, despite having a cadre strength of 4192, does not have any post in the highest two grades viz. the apex scale of Rs.80000 (fixed) and HAG + of Rs.75500-80000. The cadre does not have any reserve at present. The promotion prospects of the officers in the cadre are highly adverse vis-à-vis other similarly placed Group ‘A’ and All India Services. As such, a cadre review of the service is essential not only to remove the existing anomalies and to streamline the structure but also to implement the recommendations of the Sixth CPC.
2.4 Need for Review
2.4.1 Policy initiatives taken by the government and reforms in tax administration have helped the Indian economy to grow by leaps and bounds. Due to streamlining of tax administration, there has been spectacular increase in the direct tax revenue, which has grown from around only Rs 13,000 crore in 1991-92 to Rs 3,38,212 crore in 2008-09, representing an increase of more than 26 times in less than 2 decades. The contribution of direct taxes to the national tax collections has now exceeded that of indirect taxes. The number of tax payers has increased in the same period by approximately 4 ½ times. The cost of collection of direct tax revenue is now one of the lowest in the world at 49 paise for every 100 rupees of tax collected. ( to include comparative chart from other countries, with latest possible figures) The direct tax to GDP ratio has increased from 3.15 % in 2000-01 to 6.67% in 2007-08. The healthy position of tax revenue has played a crucial role in enabling the government to increase funding for development projects of social and economic importance. The increased expenditure on infrastructure, crucial for rapid growth, could be possible only due to very buoyant tax revenues. In fact, direct tax revenue has had a buoyancy of more than 2.0 over the last decade. In other words, for every 1% growth in GDP, the direct tax revenue has grown by over 2%. This can be attributed, inter alia, to better tax administration and restructuring of the Income Tax Department. However, the historical healthy rate of growth in direct tax revenue may not necessarily continue in the future. In order to maintain tax buoyancy and to effectively manage the rapid increase in the workload of the Income Tax Department, certain urgent steps are necessary. A review of the manpower requirement of the department is necessary for:-
Managing assessment workload,
Retaining effective supervision and control over the Assessing Officers for ensuring accountability.
Providing better tax services particularly in the area of refunds,
Reducing the voluminous arrears of tax demand
Managing intelligence workload,
Widening and deepening of the tax base.
Reducing litigation


3. INTRODUCTION AND BACKGROUND
3.1 The Present Economic Scenario
3.1.1 India, with its growing population of more than 115 crores, adding a population equal to that of Australia every year, faces its most daunting challenge of mobilizing adequate resources for its hundreds of millions of have-nots. It is striving hard to achieve the MDG (Millennium Development Goals by 2015) to reduce the incidence of poverty by half, reducing U-5 MR (under five mortality rate) to 42 per 100 from 125/1000 in 1990, scaling down maternal mortality rate (MMR) to 109/lac from 437/lac in 1991, along with ensuring environmental sustainability including providing drinking water and sanitation to at least half of the deprived. For this, massive investments of 6% and 3% of GDP are required respectively in the fields of education and health every year. The Planning Commission in 2007 estimated that we need investment of at least $100 billion every year for our infrastructure including surface connectivity. The Approach Paper to Eleventh Five-Year Plan estimates that more than doubling of annual investment is required in 2007 -12 for ensuring 9% growth. This translates into Rs. 13 lac crores, ie. 25% of current GDP, which is a challenging task. Out of this, power sector - an essential prerequisite for faster growth of income and employment - alone needs Rs. 7.5 lac crores, ie. $150 billion. Simultaneously, we have to maintain a steady grip on the fiscal deficit. As per the FRBM Act, we should have reduced it to 3% by 2009. But one year of lower growth in 08-09 saw the fiscal deficit zooming to nearly 5.5%.
3.1.2 The Hon’ble Prime Minister has time and again emphasized the necessity of higher investment in core sectors and social sectors while announcing path-breaking schemes of gigantic financial magnitude like Bharat Nirman, JNNURM, NREGS, Rural Electrification, etc. While inaugurating a seminar in FICCI in December, 2006, the P.M. said, “People in democratic societies expect governments to deliver on their basic needs.” He emphasised that the government must be able to mobilise and deploy financial and administrative resources to provide a range of services like health, education, etc. - “People expect governments to invest in public goods.” The Planning Commission in 2006 while spelling out the agenda for the Eleventh Five-Year Plan, stressed on more investment in education, health and infrastructure. It, however, underlined the shortage of funds for these activities. All round investment is also required for India to ascend and gain its rightful place at the top of the HDI table.
3.1.3 In the face of such challenges, collection of tax with an accelerated annual growth rate is the basic prerequisite for domestic mobilisation of resources. Happily, the I.T Department has been able to triple its collections from 1.05 lac crores to 3.38 lac crores between 2003-04 and 2008-09, ie. in a matter of only 5 years. Simultaneously, it has reduced its cost of collection to 0.56 paise per Rs. 100 of revenue from Re 2/Rs. 100 only a few years ago. Thus by a streamlined and arduous process of administration it has saved over Rs. 4800 crores in collection costs in FY 2008-09 alone. The ratio of taxes to GDP in OECD countries is about 36%. We have a long way to go, the ratio in India being in the region of a mere 11-12%.
3.1.4 At the least, if our average growth of GDP is maintained at the current level, in next 5 years, we would have doubled our GDP. The Income Tax Department would be a proud contributor to this growth with collection of about Rs. 7 lac crores, assuming a modest growth rate of 15%.
3.2 Organisational Chart & Hierarchy
note:( under preparation, and to be added; based on finalised structures )
3.3 Functions & Role of Income Tax Department
3.3.1 It has been aptly said that taxes are the price we pay for civilization, no civil society is possible without Revenue. One of the most important sovereign functions is the collection of tax for development, security and governance. The centrality and importance of the Revenue services to administration and nation-building has been recognized down the ages. In all developing countries and in most progressive countries, Revenue services are accorded an important place in the governmental set up and hierarchy. The affairs of State cannot be managed without according due importance to the Revenue services. The mobilization of resources is in itself an important and challenging task. In India, the Indian Revenue Service ( IRS ) officers are required to discharge multiple functions. They are responsible for administering a wide range of fiscal laws like Income-tax Act, Wealth Tax Act, , Fringe Benefit Tax, Securities Transaction Tax etc. In this role they assess and collect taxes leviable. They also undertake enforcement and deterrent activities to prevent tax evasion. They also advise the public of their rights and duties in order to create and promote a climate of voluntary tax compliance. The service is sensitive to the social and economic realities and needs of the country. Such objectives are enabled to be achieved by the Government through appropriate tax legislation. Thus, the wider aims of the Government, including development : social and economic upliftment of groups as well as sectoral/locational development objectives, are often driven and served through tax policies, for which inputs are provided by the tax policy and legislation division of the Central Board of Direct Taxes.
3.3.2 Another very important role, which has assumed greater significance in recent years, is the role played by the Revenue service in integrating our economy with the global economy. I.R.S. officers negotiate and implement a world wide net work of double taxation avoidance agreements. These tax treaties perform a vital role in attracting foreign investment. The crucial role of tax treaties in this area is not generally appreciated, but their importance in influencing the flow of capital into the country is enormous.
3.3.3 The Income tax Organisation is part of the Revenue Department of Govt. of India having the responsibility to manage the policy and collection of direct taxes. Direct Tax, being as old as organized social structure, has in democratic societies become not only a tool to mobilize resources for the state but also a catalyst to speed up the socio-economic parameters of a country. In a developing country like India, the task is all the more complex as it has to also perform as incentive to various social projects aimed at enhancing the pace of development. Thus, apart from collection of taxes for other wings of the Government to spend on such national endeavour, it has to also forego tax on certain important activities of the business world. Hence, exemption or graded relief from taxation is available from various receipts or income such as:
Agricultural income; agricultural produce market committees, Cotton Board, Tea and Coffee Board, Spices Board;
Charitable activities involving relief for the poor, education and medical aid; charitable trusts for Khadi and Village industries, Income of universities, educational institutions and hospitals; scholarship for education;
LTC, HRA and Transport allowance, medical expenditure on self or dependants;
Death cum retirement gratuity, commuted pension, leave salary entitlements, provident fund balance, family pension, receipt on voluntary retirement;
Indian Embassy staff, security related service provided by a foreign company, UN or Commonwealth remuneration, income of European economic community, SAARC fund for regional projects, foreign income of professionals;
Retrenchment compensation of an industrial worker, Employee welfare Funds, Income of a central or state ST/SC/BC/Minority community, Ex-servicemen Promotion Corporations;
Allowances of Members of Parliament or Legislature, Govt. Awards;
Certain Scientific institutions, News Agencies, Institutions of Law, Medicines, Accountancy, Engineering etc ;
Relief Fund of PM;
North Eastern Development Finance Corporation Ltd., income of a native of a north-eastern state and Sikkim, industrial undertakings of north-eastern region, and special category states like Sikkim, HP, Uttaranchal etc;
Central Electricity Regulatory Commission, IRDA, Credit Guarantee Fund for small industries, Employee State Insurance Fund, Registered unions;
Long term capital gains, Dividend, Venture Capital Funds;
International Sporting Events;
Reconstruction of power generation companies, Industrial undertakings in free trade zones, SEZs, 100% EOUs.

3.3.4 Further tax-deductions are also available in case of donations for scientific research or rural development and to political parties; income of industrial undertakings in backward areas, foreign projects, housing projects, infrastructure, telecom, industrial park, power industries, natural gas companies, multiplex theatres, hotels, convention centres, mineral oil industries, processing of bio-degradable wastes, employment of new worker, cooperative societies, publication of books, income of authors, foreign income of teachers and various small savings (Like LIC, NSC,PPF etc.)
3.3.5 With such hundreds of concessional treatments, unscrupulous persons would not hesitate to make false claims of deduction to evade taxes, and it has been a constant battle for the tax department to detect such evasions and levt tax, interest and impose penalties thereon. Yet in a developing country, such incentives to various regions, classes of persons and categories of industries cannot be wished away. Further in an expanding globalised environment, incentives are a must for investments in critical areas like power, export, telecom, infrastructure, rural development, defence production, etc in order to make the country march ahead and attain the tag of a ‘developed country’. The exemption on the basic income of up to Rs 1.50 lacs — as well as on further relief to women and senior citizens is also a necessity to drive the economy through consumption and production, as much as to bring a sense of security. It was estimated by IMF in 2006 that this exemption of threshold limits cost us 1.33% of GDP and the deduction on charitable activities a further 0.2% of GDP as revenue foregone. If all the exemptions/reliefs are taken, then the I.T. Department is foregoing more than it collects.
Unlike in a developed country, the democratic, social and geographic structure of our country does not permit a straight-jacket policy of taxation. Therefore the Income tax Act incorporates 644 sections as of now with over 120 sections and further sub-sections granting exemptions, deductions, relief and rebates, followed by rules for their implementation. The Income tax Act is an elaborate code containing detailed Procedures of assessment, appellate forum, Settlement Commission, Authority for Advanced Rulings, FBT, etc. With hundreds of judgments of High Courts and Supreme Court every year, the law in respect of Direct Taxes continues to be redefined while the subject becomes more and more complicated. Every year also the national Budget effects a large number, even up to 100 amendments to implement Government’s fiscal policy, and respond to the needs of the transforming economy. . In a dynamic economy like ours, we cannot wish away such rapid changes even though a stable law is desirable. This makes the job of the officers more difficult. The job of tax-payers is also not easy. But to address this problem, the department has gone ahead with various schemes like TRPs, Helpline, Taxpayers’ Assistance Cell etc.
3.3.6 Further after the last restructuring in 2000, various new fields of activity have emerged for which the existing officers and staff were diverted. The Fringe Benefit Tax was introduced in 2006, country-wide CIT(TDS), and CIT(Audit) were posted; CsIT(OSD) were created in Board; DGs of HRD, BPR, Infrastructure, Legal & Research, International Taxation, Transfer Pricing, Computer Operations etc. The number of taxpayers and the resultant number of scrutiny assessments is increasing at a fast pace even though the Income tax department pursues the policy of selecting as few as 2% of the cases for deeper examination. The procedure of assessment with emphasis on natural justice and documentary evidence is time-consuming. This has left a gaping hole in the existing administrative structure and the core functions, which must be plugged quickly and effectively.
3.4 History of Cadre Review
3.4.1 Four cadre reviews have been undertaken so far in the Indian Revenue Service. These covered the periods 1975 to 1979, 1980 to 1982, 1986 to 1988 and 1996 to 2000. Whereas the first two Cadre Reviews resulted in the creation of some posts, the Third Review only resulted in the upgradation of a few posts, by surrender of equal number of posts at the appropriate levels. The Fourth Review got subsumed in the Restructuring exercise of the Income Tax Department in 2000, as a result of which the overall strength of the workforce was reduces by 2750.
3.4.2 It is seen that there have been only four cadre reviews of the IRS over a period of four decades. The guidelines of the DOPT require cadre review every five years. Therefore, against 8 cadre reviews required, the IRS has had only 4. Since the last cadre review, the workload of the Income Tax Department has increased manifold. The Revenue collected has increased more than three hundred percent. With globalisation and opening up of the economy, there has been a great increase in the number and complexity of taxation issues relating to cross border transactions and entities. A host of new and emerging areas now require attention on priority. However, the Department finds itself constrained from delivering better results in keeping with the potential of the economy due to lack of manpower and distortion in the cadre structures. At the same time the career prospects of IRS officers have seen deterioration in comparison with their peers in other services. As a result, the morale of the officers has suffered. In view of the above, the present cadre review is not only overdue, but also critical.

4. FUNCTIONAL REQUIREMENT
4.1 Growth of Workload
4.1.1 The number of assessees has greatly increased whereas the number of Assessing Officers has not increased since 2001. This has adversely affected the ability of the department to properly scrutinize the returns of income. The impact of scrutiny of returns can be measured by the collection of post-assessment tax, as opposed to pre-assessment tax paid by the assessee. Table 1 below shows the position regarding the scrutiny and processing workload of the department as well as the percentage of cases taken up for scrutiny and the percentage of tax collected on regular assessment.
Table- I Assessment Workload, cases selected for scrutiny and Tax on Regular Assessment
1
2
3
4
5
6
7
Year
Scrutiny
Workload
Processing
Workload
Total
Workload
% of cases
selected
for scrutiny
Tax on Regular
Assessment
(Rs. crore)
% of Tax on
Regular
Assessment
to
Total Tax
1996-97
528,154
115,83,285
121,11,439
4.36
5,532
14.22
97-98
11,08,764
127,51,169
138,59,933
8.00
4,954
10.26
98-99
598,076
178,32,219
184,30,295
3.25
6,825
14.65
99-00
553,637
268,46,956
274,01,593
2.02
6,766
11.67
00-01
360,141
310,46,331
314,06,472
1.15
8,121
11.89
01-02
217,450
365,08,234
367,25,774
0.59
9,492
13.72
02-03
894,415
369,00,040
377,94,455
2.37
10,745
12.93
03-04
338,275
269,78,376
273,66,651
1.24
16,015
15.24
04-05
439,258
262,98,066
267,37,324
1.64
6,006
4.52
05-06
425,225
328,21,007
332,46,232
1.28
22,122
13.39
06-07
527,005
314,45,896
319,72,901
1.65
30,396
13.20

4.1.2 From the table above, it can be seen that the workload has been steadily increasing and has reached 319.73 lakhs in the year 2006-07 (the latest year for which C&AG figures are available). It can also be seen that from a level of 8.00% scrutiny in 1997-98, the percentage of cases selected for scrutiny has fallen to 1.65 in 2006-07. It has been found that as a result of examination of returns, majority of the additional tax demand raised relates to incorrect/fraudulent claims made by taxpayers. It is apparent from the table that whenever the Department has increased the percentage/number of cases selected for scrutiny, it has been able to collect more regular tax in subsequent years. This is because the assessments are completed in the month of December/March and the tax on the demand raised is collected in the subsequent financial year. Such wrongful claims can be detected only if a sufficiently large proportion of returns is subjected to scrutiny. The present level of scrutiny (1.65%) is too low. If more than 98% of returns are accepted without examination this would encourage a feeling among tax payers that they have a high probability of escaping detection if wrongful claims of deduction are made in their returns. The figures in column 7 of the Table above shows that there is a decline in the contribution of tax collected on regular assessment in relation to the total tax. While this may indicate an improvement in tax compliance by the assessees, it is also indicative of the fact that the department’s ability to curb leakages of revenue is severely compromised due to manpower constraints. Another disturbing trend is that a large number of taxpayers, who had filed returns in the past have stopped doing so. This anomaly needs to be investigated and such stop filers identified and notices issued to them to bring them back within the tax net. Failure to do so results in very large loss of revenue. In 2006-07 the direct tax revenue was Rs 230,181 crore. On a base of 3.19 crore assessees during this year, the average amount of tax paid by each taxpayer amounted to Rs 72,157/-. Hence the tax lost during the year due to failure of 16,89,901 assessees to file their returns and pay tax would amount to a staggering Rs 12,193.82 crore. It is therefore of utmost importance that speedy action be initiated to redress this situation.
TABLE 2
Disposal of Workload
1
2
3
4
5
6
7
8
9
10
Year
Scrutiny
Workload
Disposal during the year
% Scrutiny Work-
load
disposed
Processing
Workload
Disposal during the year
% Process
ing
Work-
load
disposed
Total
Workload
Disposal during the year
%
Work
load
disposed
1996-97
528,154
336,329
69.36
115,83,285
100,82,930
87.05
121,11,439
104,49,259
86.28
97-98
11,08,764
920,721
83.04
127,51,169
103,54,926
81.21
138,59,933
112,75,627
81.35
98-99
598,076
201,849
33.75
178,32,219
88,52,299
46.84
184,30,295
85,54,148
46.41
99-00
553,637
316,223
57.12
268,46,956
140,43,850
52.31
274,01,593
143,60,073
42.88
00-01
360,141
225,730
62.68
310,46,331
186,33,110
60.02
314,06,472
88,58,840
60.05
01-02
217,450
168,010
77.23
365,08,234
198,58,558
54.67
367,25,774
201,26,568
54.80
02-03
894,415
172,410
19.28
369,00,040
337,92,795
91.58
377,94,455
339,65,205
89.87
03-04
338,275
197,390
50.83
269,78,376
213,80,490
79.25
273,66,651
215,77,880
78.84
04-05
439,258
210,866
48.00
262,98,066
204,92,965
77.93
267,37,324
207,03,831
77.43
05-06
425,225
230,698
54.25
328,21,007
226,49,070
69.00
332,46,232
228,79,768
68.82
06-07
527,005
241,983
45.92
314,45,896
209,98,629
66.78
319,72,901
212,40,612
66.44

4.1.3 Table-2 shows the position regarding disposal of workload. It is apparent that the overall rate of disposal (scrutiny and processing together) fell from 1996-1997 to 1999-2000, but then improved from 2000-2001 to 2002-2003. Thereafter there has been a steady decline in the rate of disposal. This is particularly marked in the case of scrutiny assessments, where even 50% of the workload could not be disposed off during the year. This is a very unhealthy trend and calls for immediate remedial action, since timely completion of assessment and collection of taxes is vital for providing funds for the government.
3.1.4 In any tax administration it is inevitable that the total quantum of taxes as felt to be due by the tax authorities may not be fully collected during the year on account of a variety of reasons. This may be because certain tax demands are disputed by the assessee and therefore not paid till disposal of appeals, tax claimed to have been paid pending verification, demand stayed by the courts and by other authorities. Taxes remaining uncollected adversely effect the fiscal position of government and therefore full efforts must be made to ensure prompt collection of all taxes owed to government.
4.1.5 At present (as on 31.03.2008) there are 336,62,802 registered tax payers in the country which is roughly 3% of the population. A number of factors together have the cumulative effect of keeping large sections of the population out of the tax net. Some of these factors are non-taxability of agricultural income in a primarily agrarian economy, demographic profile of the population, high exemption limit relative to per capita income, etc. However, even allowing for such factors, there is considerable scope for further widening of the tax base. If the tax base is widened, it follows that the revenue of the government would be enhanced while at the same time the burden on each taxpayer can be reduced.
4.1.6 Studies have shown that there exists a gap between the income reported in the I.T. returns and the national income estimates. For example, a study conducted by the National Council for Applied Economic Research (NCAER) examined the income distribution of households in India during 1995-1996, 2001-2002 and 2005-2006. A comparison of NCAER figures with the I.T. Department statistics reveals the following:
(Figures in ‘000)
Income Range
(in Rs )
Financial Year 2001-02
Financial Year 2005-06
NCAER (No. of households)
Income tax (No. of individuals and HUF)
NCAER (No. of households)
Income tax (No. of individuals and HUF)
90,000 to 2 lakhs
41,262
24,160
(58.55%)
53,276
25744
(48.32%)
2 lakhs to 5 lakhs
9,034
1,603
(17.74%)
13,183
1,761
(13.36%)
5 lakhs to 10 lakhs
1,712
463
(27.04%)
3,212
658
(20.49)
More then 10 lakhs
807
72
(8.92%)
1,731
144
(8.32%)
Total
52,815
26,298
(49.79%)
71,402
28,307
(39.65%)

4.1.7 Although the comparison cannot strictly be made between households and individuals, considering the fact that even a household having income upto Rs 5 lakhs may not have any income-tax liability, if the income is earned by two or three members such that they are each below the taxable limit. However, this is not likely to be the case in respect of households having income of Rs 5 lakhs or more. Yet it can be seen that the department’s ability to capture the taxable entities has declined from 49.79% in 2001-02 to 39.65% in 2005-06.
4.1.8 Another study conducted by the Indira Gandhi Institute of Development Research has estimated the black money in the country at 18.21%. This implies that incomes of the order of Rs 8,58,264 crore are not accounted for, and consequently there is a tax gap of approximately Rs 1,71,653 crore (assuming taxation at the median rate of 20%). The potential tax loss thus amounts to more than 50% of the tax actually collected during 2007-2008. Department’s ability to curb tax evasion is positively correlated to the manpower available for investigation, intelligence, assessment, etc.
4.2 Managing Assessment Work:
i. The Workload Management Model
4.2.1 The more time is available to the AO for examining the returns, books of accounts and other documents relating to a case picked up for scrutiny, the more accurate assessment of taxable income would be possible. It is therefore internationally accepted that the Assessing Officer must not be burdened with un-manageably large number of assessments, as this proves to be counterproductive since proper scrutiny cannot take place due to paucity of time. About 150 assessments in a year have been felt to be the maximum an AO can be expected to handle without losing control over the entire gamut of functions he is required to perform. Table below shows the work load of scrutiny assessments since 2001-2002 to the present, and the projection for the year 2013-2014:
Year
No. of assessees
No. of AO
Assessee per AO
Scrutiny Workload
Scrutiny workload per AO
2001-02
262,26,000
3,616
7,253
217,450
55
2007-08
336,62,802
3750
8977
527,005#
141
2013-14
430,88,640
3750
11490
861,773*
230

*[Assuming 2% selection for scrutiny (i.e. 861,773) out of 430,88,640 returns filed.]
# 2006-07
4.2.2 From the table above it can be seen that the Department is constrained to keep the percentage of scrutiny assessment/audit at a very low percentage at 1.65% so as to maintain the per Assessing Officer figure of scrutiny assessment below 150. This is, however, at the cost of reduction of ‘tax gap’ in respect of a large number of taxpayers. The Government insists that a minimum scrutiny percentage of 2% should be maintained by CBDT to optimize collection of regular taxes and to reduce tax gap in a large number of cases. While maintaining scrutiny at 2% has been difficult even at the level of present workload, the same is likely to become much worse in the next 5 years, given that the number of taxpayers is expected to grow even further.
4.2.3 With increase in computerization and the benefits of technology induction, the future rate of growth, both in number of tax payers and revenue would be higher than in the past. Even assuming the historical growth rate between 2001-2002 to 2007-2008, the number of taxpayers is expected to grow 1.28 times to 430,88,640 in 2013-2014. Similarly, revenue has grown 4.55 times from Rs 69,198 crore in 2001-2002 to Rs 3,14,468 crore in 2007-2008. Similar rate of growth can yield revenue of Rs 14,30,829 crore in 2013-2014. If the number of Assessing Officers remains unchanged, the assessees per AO would increase to 11490 and the scrutiny workload would increase to 230. No department can function under such punishing workload. The efficiency and effectiveness of the department is bound to suffer, and certain proportion of income would inevitably escape detection/assessment. It is imperative that the number of AOs be augmented. Based on the norm of 150 scrutiny assessments per AO the additional requirement of AOs in 2013-14 would be as follows:
No. of scrutiny assessment for disposal
861,773
No. of Assessing Officers
3750
No. of Assessing Officers required for disposing scrutiny workload @ 150 assessments per AO
5,745
Additional requirement of
(a) AO of which,
1995
ACIT/DCIT (20%)
ITO (80%)
399
1596
(b) Ranges @5 AO/Range
399
(c) Commissionerates @ 3
Ranges/ Commissionerate
133
(d) CCIT @ average 2.6 Commissionerates per CC
54

4.2.4 In consonance with the prescribed norms, creation of following additional posts of support staff would be required:-
S.No.
POST
No. of addl. posts required
1
Inspector
3724
2
STAs/TAs
7714
3
Stenos/DEOs
1948

ii. The Revenue Collection Model
4.2.5 If projections are made on the basis of revenue growth, then, the revenue from direct taxes has grown as under:-
(in Rs. 000 crores)
Financial Years
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
Total Direct Taxes
68.3
69.2
83.2
105.1
132.7
165.2
230.2
314.4
337.00

Even if some of the growth in Direct tax collection is attributable to growth in the economy and the price index as well as increased efficiency, growth of 460% in direct taxes collection since the time of last cadre review should mandate at least doubling of the existing strength. This will lead to an increase of 4192 officers in the cadre strength of IRS alone and an overall increase of approximately 61000 officers and staff in the Income Tax Department as a whole.
iii. The Expected Taxpayer Base Model
4.2.6 In another exercise, requirement of additional manpower on the basis of PANs allotted was also worked out. Growth chart of PAN allottees is as follows:-

It is observed that total number of PAN allottees has gone up to 700 lakhs in the year 2008-09. All these PAN allottees are potential taxpayers and a majority of these allottees will actually start paying tax in the next few years. If the number of PAN allottees is deemed to be a precursor to their conversion to taxpayers in next 3 to 5 years, then it will be safe to assume that number of taxpayers in the year 2013-14 would have increased to 700.37 lakhs. As per the prescribed norms in the last cadre review wherein one post of administrative CIT was created for every one lakh taxpayers, 700 posts of administrative CITs will be required in the year 2013-14. Thus, an additional 448 posts of administrative CITs would need to be created under this model. In accordance with the prescribed staff strength for a model Commissionerate, this will also result in creation of 1344 additional posts of Range heads in the grade of Additional/Joint CIT, creation of 6720 additional posts of Assessing Officers in the grade of DCIT/ACIT/ITO along with creation of 12544 additional posts of ITIs, 25984 additional posts of TAs/STAs and 6563 additional posts of Stenographers /DEOs.
In each of the aforesaid three scenarios, the number of additional manpower required to handle the increased workload and cater to the expected level of taxpayer services is very large. The following table summarises the number of additional posts required at different level of IRS officers, Group B officers and support staff as well as the financial implication (per annum) involved with these additional posts:-
Additional manpower requirement under three different models
Post
Scrutiny Workload Model
Revenue Collection Model
Expected Taxpayer Model
No. of additional Posts
Financial Implication (Rs. Crore)
No. of additional Posts
Financial Implication (Rs. Crore)
No. of additional Posts
Financial Implication (Rs. Crore)
CCIT
54
3.87
116
8.32
172
12.34
CIT
133
9.15
731
50.31
448
30.83
Addl/Jt CIT
399
20.07
1253
63.04
1344
67.61
DCIT/ACIT
399
12.51
2092
65.61
1344
42.15
ITO
1596
40.79
4448
113.67
5376
137.38
ITI
3724
72.99
9793
191.96
12544
245.88
SrTA/TA
7714
143.37
17500
325.25
25984
482.93
Steno
1948
36.20
5850
108.72
6563
121.98
Total
15967
338.95
41783
926.88
53775
1141.10

4.3 Appeals
4.3.1 Tax laws spawn litigation for various reasons. The demands of natural justice in the assessment and post-assessment processes, the fact that tax laws are subject to interpretation, the large number of exemptions and deductions which result in disputes between the Department and the assessee, and the fact that unaccounted income has to be proved by the assessing officer as opposed to the clear demarcation between the legal and contraband in other laws lead to a large number and variety of litigations. These litigations add enormously to the tax costs. The entire appeal process is time consuming and costly. Though a time limit of one year has been prescribed for disposing off appeals filed with the Commissioner of Income Tax (Appeals) but data obtained from the CAP-1 statements shows that over a period of years demands which have been locked up in appeals have been growing rapidly. There are many factors which have contributed to this, the primary one being the growth in overall revenues and the tax base, which has obviously resulted in growth in litigation and potential revenues being locked up in limbo. The following graph illustrates this point:-

4.3.2 The data on appeals with CIT(A) is also revealing :-

4.3.3 It is seen that there is a sudden increase in the number of appeals. This increase corresponds to the great increase in revenue collections in the last 2-3 years. It also corresponds to the globalisation of our economy, implying thereby that the complexity of taxation and international transactions has also increased over time, resulting in greater litigation. It is thus obvious that the changed scenario warrants a corresponding alteration in our set up and all other parameters vis-à-vis appellate work.
One Appellate Commissionerate for each Administrative Commissionerate is accordingly proposed. Consequently, following staff requirement emerge:-
Presently 252 Admn Commissioners are working in the country along with 260 CIT(A). The number of administrative Commissioners is however, proposed to be increased to 307. The number of CIT(A) will also go up to 307. Accordingly, additional 47 posts of CIT(A) will need to be created
Following number of posts will be required in other cadres:-
307 *1= 307 posts of ITIs
307*1 = 307 posts of Sr TAs

4.4 Legal & Advocacy
As regards posts of CIT(DR) in ITAT, no change in the existing deployment of posts of CIT(DR) is proposed. The number of Sr. DRs is proposed to be retained at 57 posts at par with number of permanent benches of ITAT. However, the CIT(DRs) and Sr. DR are to be given one AC/DC to help them with work relating to litigation process, and to strengthen the Legal & Advocacy setup of the Department.
4.5 Investigation & Intelligence
4.5.1 The Investigation Wing is the deterrent arm of the Department. However, recently, its activities are severely hampered because of shortages of manpower. This is reflected in the no of warrants executed, which has declined from 4612 in 1995-96 to 3364 in 2007-08. The assets seized per warrant has also shown a decrease, from Rs. 458.14 crore in 1995-96 to Rs. 411.45 crore in 2007-08. Considering the spurt in economic activity in the country, ideally the situation should have been the reverse. But, lack of manpower has marred the functioning of the Investigation Wing, putting a limitation on the number of search/ survey action that can be conducted by the Wing. Accordingly, the public image of the Wing, as the deterrent arm, has also eroded and tax evasion has flourished without fear at a rate and scale not foreseen before.
4.5.2 The Investigation Wing is entrusted with the task of combating tax evasion and unearthing concealment of income and wealth with the ultimate goal of curbing the menace of black economy. The mandate of the Investigation Wing is to gather intelligence and thereafter carry out search and seizure operations, surveys and enquiries for unravelling tax evasion. In addition, the activities of the Investigation Wing encompass-
(i) Processing of Tax Evasion Petitions - TEPs are a data mine of information. They are a great source of search and surveys. Effective utilization of the information contained therein can lead to huge revenue realization, as also buttress the Investigation Wing’s deterrent image. However, shortages of manpower in the Investigation Wing have led to underutilization of this source of information. With an increase in public awareness, information. Presently, about 8000 TEPs are pending for disposal. Situation is that TEPs are routinely forwarded to the units, where they languish for years altogether for want of attention.
(ii) Pre-search Investigation- Processing of any search case involves reconnaissance work before the actual operation. It is this information which is a benchmark for the success of the search operation. The entire information about the group to be searched needs to be collected in advance and processed for the actual operation.
(iii) Post-search Investigation- With the rise in economic activities and ease of transactions through technology, the financial transactions encompass intricate networking, and transcend international borders. Thus, post search investigations involve a lot of time. The Income Tax Act has mandated 60 days’ time for completion of appraisal report. This time is often not sufficient to complete the enquiries, given the manpower available. Thus, the quality of appraisal reports is affected.
(iv) Referred investigation from other agencies- There are many agencies which aid the intelligence gathering endeavour of the Investigation Wing. These include- CBI, State EOW, State CID, Customs & Central Excise, REIC, CEIB, PMLA, BCTT, FIU etc. Cases referred by these agencies are taken up for investigation in the Wing.
(v) Consequential searches
(vi) Other miscellaneous work, like Assistance to Central Circle/Assessment Wing specifically when the findings of the Appraisal report are at variance with the finding of the Assessing Officer as per the procedure laid down in guidelines for assessments in search & seizure cases.
4.5.3 All the above activities carry huge revenue potential. However, shortages of manpower make it difficult for the Investigation Wing to work to its full potential. In addition, some areas have vast territorial jurisdiction, which render the enquiry work difficult. There has been increase in sensitive cases. Overall, the potential and volume of work in the Investigation Wing has increased manifold but the resources, particularly in terms of manpower, have not kept pace, leading to denting of the deterrent mechanism that the Wing encompasses.
4.5.4 The changing global economic scenario and the ensuing challenges call for strengthening of Investigation Wing in terms of manpower as well as technology. It is imperative that the Investigation Wing is augmented with sufficient manpower and technical capability to marshal its resources towards effective functioning, especially in order to meet the following challenges:
(a) Increase in magnitude of black money
(b) Terrorist funding and Narcotics trade
(c) New areas of economic activity – SEZs, Services, Infrastructure Development, High economic growth, High volume projects, Power projects
(d) Investments flowing into new geographical areas – development of new towns and cities
(e) New methods of tax evasion – sheltering in cooperatives, NGOs, banking channels
(f) Rise in the number and complexity of hawala transactions
(g) Easy manoeuvring and manipulation of accounts on computers
(h) Increase in e-commerce, bogus billing, floating of paper companies, financial scams, 132A cases
4.5.4 This changing scenario calls for strengthening of Investigation Wing in terms of manpower. The Central Charges also need to be strengthened to carry out search assessments.
4.5.5 The following posts are required in the investigation wing on the basis of functional requirements:-
No change in the existing number of DGIT
As per functional requirement, 3 additional posts of DITs are considered necessary. These posts are to be created at Dehradun, Goa (Panaji) and Chennai.
12 additional posts of Jt. DIT/Addl.DIT to be created for the above 3 additional posts of DIT.
48 additional posts of DDIT/ADIT to be created for the three Directorates.
15 additional posts of ITOs to be created for the two new directorates.
2 posts of CIT (Central) to be created at Chandigarh and Bhopal, along with complementary strength of staff and officers.

4.6.: Reorganization of DIRECTORATES of the Department ( further inputs are expected from Members representing ITEF)
4.6.1 Most of the Directorates of Income Tax are attached offices of the Central Board of Direct Taxes and they constitute a vital link between the Board and its field formations for implementation of Direct Tax Laws. Traditionally, these Directorates have their own Cadre of Group ‘B’, ‘C’ & ‘D’ Staff. Some of these Directorates have combined cadres, though posts have been specifically earmarked and allocated for them. Few Directorates were created in CBDT after the last re-structuring of the Department. These Directorates do not have their own cadres, however, posts in Group ‘B’, ‘C’ and ‘D’ have been sanctioned for these Directorates and placed in the overall cadre strength available with Chief Commissioner of Income Tax, Delhi. Some more Directorates have been created by CBDT [i.e. Directorates of Income Tax (Systems) –II to VI and DIT –Intelligence] recently by diversion of existing posts. No posts in Group ‘B’, ‘C’ and ‘D’ have been created for these new Directorates.
4.6.2. The posts for the Directorates of HRD, Infrastructure & Legal & Research-I were created at the time of last cadre restructuring and their group ‘B’, ‘C’ & ‘D’ posts are part of the overall cadre strength of CCIT, Delhi. The other Directorates have been created after diversion of existing field posts of the Income Tax Department and no separate post in Group ‘B’, ‘C’ & ‘D’ has been created for these Directorates. Staff has been drawn in these Directorates from CCIT, Delhi on ad-hoc basis.
4.6.3 The Directorates of Income Tax (PR PP & OL) & Directorate of Income Tax (Systems), besides performing normal nature of duties are also assigned with the work of technical nature. Directorate of Income Tax (PR PP & OL) is responsible for implementation of official language policy in the Income Tax Department and collection and analysis of statistical data for formulation of policies. Directorate of Income Tax (Systems) is responsible for computerization in the Income Tax Department. Accordingly, the Directorate of Income Tax (PR PP & OL) has technical posts for its Official Language Wing and Statistical Wing. Similarly, the Directorate of Income Tax (Systems) has EDP Cadre posts.
4.6.4 There is an acute stagnation at all levels in almost all Cadres of the Directorates. Each Cadre has its own Recruitment Rules for Group ‘B’, ‘C’ & ‘D’ posts and there is no provision of inter-charge transfer between them. As a result, once a person is appointed in a particular Directorate, he has to remain in the same Directorate during his entire length of service. Apart from blocking the scope of upward mobility, working in the same office for a long time also results in monotony and loss of interest in the official duties. This monotony can be broken if the staff and officers of the Directorates are allowed to move between the Directorates on Inter-charge transfer.
4.6.5 The other problem being faced by the new Directorates emanate from acute shortage of manpower. The staff strength for the new Directorates has been provided by CCIT, Delhi. In the case of three Directorates, posts required for functioning of the Directorates were sanctioned, while the others are drawing staff from the existing cadre strength of the CCIT, Delhi. It has not been possible for CCIT, Delhi to provide full component of staff to these Directorates due to various constraints.
4.6.6 A Committee was set up by CBDT under the Chairmanship of the Director General of Income Tax (Admn) for restructuring of the Directorates attached to CBDT. The Committee, after examining the Recruitment Rules and the eligibility criteria/qualifying service, etc., for promotion to different levels found that the Recruitment Rules do provide for two or more promotions during the career of an employee subject to availability of vacancy. The Committee found that the employees of these Directorates as per their eligibility have been extended the benefits of the Assured Career Progression scheme which grants financial upgradation only, but does not extend regular promotion as the same in linked with occurrence of vacancy. As such, the problem of stagnation faced by the employees of the Directorates continues. The Committee considered various measures to overcome this problem of stagnation and decided upon the strategy of restructuring to provide better avenues for promotion. The Committee was of the considered view that various cadres of the Directorates need to be restructured and merged in order to provide better promotional avenues to the employees.
4.6.7 The Committee was of the view that the cadres of the Drivers and Stenographers did not require any restructuring as these cadres were already restructured in accordance with DOP&T (Estt. 'D') O.M. dated 15.02.2001 and 11.04.2001. However, after restructuring, separate cadres of the Stenographers in different Directorates will also merge to form a single cadre. It would improve the promotional scenario for this cadre also. The cadre of drivers already stands merged.The Committee noted that there was acute stagnation in all the cadres of the Directorates. Further, it noted that stagnation was not on account of non-availability of eligible candidates for promotion to higher grades but on account of shortage of vacancies in the higher grades. The Committee, therefore, was of the view that only amendments to the existing set of Recruitment Rules of various grades would not succeed in removing stagnation. Creation of better promotional avenues by restructuring the cadres will provide opportunities for promotion.
4.6.8 The Committee noted that in some of the Directorates, the cadre strength was very small because of which adequate promotional avenues did not exist and even by restructuring such small cadres, not much would be achieved. The Committee, therefore, recommended that the single cadre control for all the Directorates be created by merging the respective cadres followed by restructuring of these cadres on the broad pattern adopted in the Income-tax Department. The cadre control of the merged cadre could be with DGIT (Admn). It was noted that this may be a feasible proposition. In case of creation of unified cadre control of the Directorates, the promotional avenues would get increased.
4.6.9 A number of cadres (ranks) in different Directorates exist in the same grade pay. It may not be desirable to have such large number of cadres for proper administrative control. It is, therefore, recommended that the various cadres in Group-‘C’ be merged keeping in view the work norms and pay scales and the total number of cadres be reduced to five or six.
4.6.10 In any administrative set-up, designations have an important place, as these broadly indicate the grade and level of responsibility of an officer and provide an index for comparing positions in different departments; and further, a change of designation is indicative of advancement in official career and, as such, has a considerable effect on the morale of the officers. Accordingly, the various authorities and staff of Directorates should be re-designated.
4.6.11 The office of DG (Inv) Delhi is an attached office of the CBDT. It has separate cadre strength of its own which is supplemented by the staff from the office of CCIT, Delhi. However, all the other Directorates of Investigation in the country are subordinate offices, not attached to the CBDT. The members of the Committee were of the view that this is an anomalous situation. The Committee, therefore, recommended that the office of DG (Inv), New Delhi should be made a subordinate office of CBDT. In its place the newly created Directorate of Vigilance, Infrastructure, HRD, L&R and BPR may be given the status of attached offices.
4.6.12 In view of these recommendations the structure of the restructured cadres will be as under:-
S.
NO.
EXISTING CADRE
PROPOSED CADRE
PAY SCALE
METHOD OF RECRUITMENT
REMARS
1.
New Post
Sr. Administrative Officer
PB-3
Rs.15600-39100 with Gr. pay of Rs.6600
100% by way of promotion from Administrative Officer Gr.I
New posts. Initially this post can be filled up from amongst AAD who have put in 4 years regular service as such.
2.
Addl. Asst. Director
Administrative Officer-Gr.I
PB-2
Rs.9300-34800 with Gr. pay of Rs.4800
100% by way of promotion from Administrative Officer Gr.II
The post of AAD may be upgraded to the post of A.O. Gr.I
3.
Superintendent Senior
Administrative Officer-Gr.II
PB-2
Rs.9300-34800 with Gr. pay of Rs.4600
100% by way of promotion from Sr. Technical Assistant
The post of Superintendent (Sr.) may be upgraded to the post of A.O. Gr.II
4.
Superintendent Junior
Sr. Technical Assistant
PB-2
Rs.9300-34800 with Gr. pay of Rs.4200
50% by way of promotion from UDC and 50% by way of Direct Recruitment
The post of Superintendent (Jr.) may be merged with the post of Sr. Technical Assistant
5.
Assistant
Sr. Technical Assistant
PB-2
Rs.9300-34800 with Gr. pay of Rs.4200
50% by way of promotion from UDC and 50% by way of Direct Recruitment
The post of Assistant may be merged with the post of Sr. Technical Assistant
6.
UDC
UDC
PB-1
Rs.5200-20200 with Gr. pay of Rs.2400
100% by way of promotion from LDC

7.
LDC
LDC
PB-1
Rs.5200-20200 with Gr. pay of Rs.1900
25% by way of promotion from group ‘D’ cadre and 75% by way of Direct Recruitment

8.
Group ‘D’
(Daftary/Peon/Farash/Chowkidar)
Daftary/Peon/Farash/Chowkidar
PB-1
Rs.5200-20200 with Gr. pay of Rs.1800
100% Direct Recruitment


4. 6.13 After restructuring, direct recruitment quotas have been fixed in the grades of TA (Rs.4000-6000) and Inspector (Rs.5500-9000). Similarly, in the Directorates also, there should be provision for induction of direct recruits (DR) in the grade of Assistant (Rs.5500-9000). At lower level, DRs may, as of now, continue to enter the grade of LDC. Induction of DRs at the level of Assistant is necessary to man posts at higher levels as LDCs cannot be expected to raise up to the level of Sr. A.O.
4.6.14 The post of DGIT (Admn.) is in the rank of Addl. Secretary to the Government of India. The Cadre Review Committee is elsewhere recommending that this post should be upgraded to the level of Secretary to the Government of India. While it would be appropriate to merge all the cadres in the attached Directorates of Income Tax to form a combined cadre under DGIT (Admn.), he will still need assistance of an HOD and his Secretariat to function as Cadre Controlling Authority. Since DIT (PR PP & OL) is the largest Directorate in terms of manpower and resources and has its own administrative unit, the DIT (PR,PP&OL) can be designated as HOD and his administrative unit can provide the Secretariat for the combined cadre.
4.6.15 AADs may be provided higher pre-revised scale of Rs. 7,500-12,000 because the pay scales of AADs have always been at par with the pay scales of ITOs in the field. In fact, many ITOs have to perform functions of AADs in Directorates. The pay scale of ITOs was revised to the pre-revised scale of Rs. 7,500-12,000 at the time of last restructuring. However, the same benefit was not extended to the AADs in the Directorates. Since, these posts have traditionally been at par and the ITOs can also be posted as AADs, it would be appropriate to restore the parity between these two posts. It is also noted that the administrative functions performed by AADs in the Directorates are performed by the Administrative Officers Grade II in the field, who have also been placed in the pre-revised scale of Rs. 7,500-12,000. There is no reason as to why there should be any differentiation between the pay scales of AADs and Administrative Officers Grade II.
4.6.16 After the recommendations of the 6th CPC, the pay scales of Assistants, Senior Technical Assistants and AADs have become identical in the scale of PB-II – Rs. 9300-34800, GP 4200. The posts of Senior Technical Assistants constitute feeder posts for AADs. Since the feeder posts and promotion post have become identical, it would be appropriate to upgrade the promotion post to the scale of Rs. 9300-34800 GP 4800.
4.6.17 Subsequent to the recommendations of the aforesaid Committee, 5 new Directorates namely, HRD, Infrastructure, BPR, L&R and TDS have been set up. As earlier mentioned, posts for the subordinate staff for three of these Directorates were placed in the Cadre strength of CCIT Delhi. The posts sanctioned for these Directorates included the posts of ITOs, Administrative Officers, Inspector and Office Superintendents. While the posts of AO and OS are common between the old the new Directorates, the posts of ITOs and Inspectors do not exist in the Cadre of the Directorates.
4.6.18 In Directorates like L&R and HRD where services of ITOs are required, these posts may be designated as AAD and these may be filled up on deputation basis from amongst the ITOs. In other Directorates, these posts may be converted into AO Grade II (at present AADs) to be filled up on promotion by secretarial staff of the Directorates. Similarly, wherever required, the posts of Inspectors may be converted to STAs. This would bring parity of designations between the old and the new Directorates and ensure smooth transfer of manpower from one Directorate to the other.
4.6.19 The posts of Addl. Asstt. Director and Private Secretary are Group ‘B’ gazetted posts and therefore, these posts should be put in higher pay scales. The Sixth Pay Commission had recommended that where it is not feasible to merge the pay scale of Rs. 5000-8000, 5500-9000 and 6500-10500 on functional consideration, the posts in the pay scale of Rs. 5000-8000 and 5500-9000 should be merged, with the posts in the scale of 6500-10500 being upgraded to the next higher grade in pay band PB-2 i.e. to the grade pay of Rs.4600 corresponding to the pre-revised pay scale of 7450-11500. This needs to be implemented.
4.6.20 Four Directorates in DG (Systems), two in BPR and one each in L&R and TDS do not have any sanctioned post of subordinate officers. 25 posts of subordinate officers (up to AAD level) need to be created for these Directorates as per the chart given below:-
S.NO.
NAME OF THE POST
NO. OF required staff
1.
ITO (to be re-designated as AAD)
2
2.
PS
1
3.
AO
1
4.
Inspectors (to be re-designated as Sr.Technical Assistants)
5
5.
O.S.
2
6.
Stenographer
4
7.
Sr. T.A.
1
8.
T.A.
4
9.
Daftary/Peon
5

Total
25

4.6.21 Six newly created Directorates viz DIRECTORATE OF INCOME-TAX (BPR-I); DIRECTORATE OF INCOME-TAX (BPR-II); DIRECTORATE OF INCOME-TAX (L&R-II); DIRECTORATE OF INCOME-TAX (TDS); DIRECTORATE OF INCOME-TAX (SYSTEMS-II) and DIRECTORATE OF INCOME-TAX (SYSTEMS-III) do not have their own sanctioned strength. These Directorates are carrying out their functions with the help of staff provided to them by the CCIT office. It is proposed that the newly created Directorates should have their own sanctioned strength and the staff posted by the CCIT office may be reverted to their respective office. Accordingly, 200 additional posts at the rate of 25 additional posts for each Directorate for the six Directorates which are presently without any sanctioned staff are recommended as follows:-
S.NO.
NAME OF THE POST
NO. OF STAFF
1.
ITO (to be re-designated as AAD)
2
2.
PS
1
3.
AO
1
4.
Inspectors (to be re-designated as Sr.Technical Assistant)
5
5.
O.S.
2
6.
Stenographer
4
7.
Sr. T.A.
1
8.
T.A.
4
9.
Daftary/Peon
5
Total
25

4.6.22 Following further recommendations are made:-
In order to avoid any confusion the entire staff of DG (Inv), New Deljhi cadre should be merged with the cadre of CCIT Delhi. Only those serving staff who opt for combined cadre of Directorates will be absorbed in them. In order to give some time to the combined cadre to fill up senior level vacancies, the officials of erstwhile DG (Inv) cadre may be asked to work in combined cadre on deputation basis.
134 posts of CCIT Delhi sanctioned for Directorate of HRD, Infrastructure, L&R-I and Vigilance should be merged with the combined cadre of the Directorates The CCIT Delhi Cadre which will be responsible to fill up the post under DGIT(Investigation), New Delhi which would require creation of identical number of posts surrendered from DGIT(Investigation),
Once the posts are shifted from the cadre of CC Delhi to DG (Admn.), identical number of posts shall be reduced from the cadre of CC Delhi.
The following group ‘A’ posts may continue to be filled up from amongst the IRS officers:-
Director of Income-tax
Addl./Jt. Director of Income-tax
Dy. /Asstt. Director of Income-tax
The Group ‘A’ posts of ISS cadre in DIT (PR, PP&OL) may also continue to be filled up from the amongst the ISS cadre officers. The Group ‘B’ and ‘C’ posts may be filled up from amongst the staff of the Directorate.
The EDP cadre being a technical cadre cannot be merged with the other non-technical cadres. The Sub-committee is of the view that the DGIT (Systems) may be designated as Cadre Controlling for the EDP Cadre posts.
DIT (PR, PP & OL) may continue to be the Cadre Controlling for Official Language cadre.

New & Emerging Areas
4.7.1 Directorate of Legal Services and Directorate of Research:
Presently the Directorate of Legal and Research, located at New Delhi, is staffed with a DGIT, 2 DsIT, 2 Addl.CsIT, 2 ACsIT and 5 ITOs. There functions include dealing with all departmental litigation in respect of SLP, writ, reviews to be filed in the SC, drafting, filing of SLPs and follow p of cases after filing of the SLPs and respond to taxpayers litigation. This involves co-ordination with the Ministry of Law. The Directorate is the Nodal authority for Judicial Reference System and is the functional head of the Statistics wing of the I.T Department It is also responsible for research .However with the present staffing it is unable to undertake any research related work as it is inundated with legal matters in respect of SLPs.
Therefore it is proposed that the Directorate of Legal and Research, in its present form, be divided into two separate and distinct Directorates namely:
Directorate of Legal Services and
Directorate of Research
4. 7.2. Directorate of Legal Services
This Directorate would handle all the legal requirements in all matters dealing with filing of SLPs, writs and reviews in the Supreme Court, all departmental litigation in the Apex Court, co-ordination with Ministry of Law in the matter of Departmental SLPs as well as response to taxpayers litigation. The Directorate would also handle the post filing SLP litigation work which includes briefing and follow up of cases. It would be the Nodal authority for the Judicial Reference System (JRS) and will be responsible for its maintenance and updation.
This Directorate would be headed by a DGIT and would comprise of 2 DsIT,4 Addl.CsIt,8 DCsIT and 8 ITOs .The group C requirements would be 4 ITIs , 7 Stenographers. 2 Addl. DsIT would be undertaking the work of filing SLPs,1 Addl.CIT would undertake the work subsequent to filing of the SLP and 1 Addl.CIT would be responsible for the JRS.
Directorate of Research
The department needs a robust research unit to carry out extensive research on various issues relating to taxation and tax policy in both national and international tax matters. Many international countries have country experts in the area of taxation. The present Foreign Tax Division is unable to meet this critical requirement With an increasing number of Foreign investment promotion board proposals-approximately where almost 30-40 proposals are presently processed every 2 weeks (424 proposals in 2008), increase in the Mutual Agreement Procedure (MAP) (21 cases in2008 and 24 in 2007 with multiple years) it is vital that we have a separate unit undertaking work in this area to supplement the FT&TR so that we are not found lagging behind. The research centre would be an International Centre for Tax Policy Research
This Directorate would serve as a body that conducts research studies, provides independent analysis, prepares and disseminates policy papers and background papers on various tax policy issues; organizes seminars, workshops and conferences with a view to activating the process of consultations among academics, Industry Associations and other concerned interest groups so as to help the Government in assessing the impact of various taxes .It would study administrative and other organizational arrangements for increasing tax compliance and reducing the cost of tax compliance , as also study the impact of tax treaties between India and other countries so as to achieve international tax harmonization for reasons of economic development of India, including for promoting investment in India and for outward investment from India. It would provide and disseminate information relating to tax policies of other countries and to act as a national/regional centre for other countries for training on issues related to tax policy and tax administration, liaise with other research institutes, university in India or abroad or organization having similar objectives, maintain data/information relating to tax policy and to make them available to the Central and the State Governments and other relevant organizations/agencies, establish and maintain libraries and information to facilitate the study of the various subjects, prepare, print and publish papers, periodicals and reports on tax policy research and education issues; and constitute regional Centres at convenient places in India or outside to undertake such research
This Directorate would be headed by a DGIT and would comprise of 1 DIT, 3 Addl.CsIT, 6 DCsIT and 3 ITOs .The group C requirements would be 4 ITIs, 5 Stenographers.
Directorate of Continuous Improvement:
Every dynamic and responsive organ of the government is on a perpetual quest of improving the way it does its business so that it can render better and improved services to the citizens. This would be undertaken in our department by the Directorate of Continuous Improvement .This Directorate would comprise of two units namely
Continuous improvement unit and
Knowledge Management unit
The Continuous Improvement unit would subsume the existing Directorate of Business Process Re-engineering which was given the work of undertaking the BPR study by the CBDT. As the report has been furnished by the consultant on 26th December 2007 and subsequently been accepted by the CBDT the next logical step would be the implementation of the report and the existing BPR Directorate can be re- designated as the Continuous Improvement arm of the Directorate of Continuous Improvement which would be the Nodal agency for implementation of the BPR recommendations as accepted by the CBDT. This arm would also be responsible to ensure that all existing projects, initiatives underway are aligned and can be integrated with the existing plan of the Department. This would ensure that all new initiatives blend in and that no organ of the department works at cross purposes with another.
This Continuous improvement unit would identify projects to be undertaken as per organizational mandate and directives of the board, commission studies for continuous improvement in the department based on the strategic objectives of ITD, coordinate activities for vendor selection, coordinate approval thereof by the competent authority, create a culture of continuous improvement in the organization by regularly involving stakeholders in discussions to identify new opportunity areas and seek feedback on studies commissioned. This Directorate would spearhead and be the nodal agency for monitoring and co-ordinating the implementation of the BPR report, change management initiatives during implementation of improvement projects within the department, and resolve issues that may emerge with respect to ensure smooth transfer
The DIT (Continuous Improvement) would have two units with him namely: (i ) the Continuous Improvement unit and ( ii ) a Monitoring & Evaluation Unit. The role of the Continuous Improvement unit is the same as has been detailed above. The Monitoring & Evaluation Unit is a specialized unit is being proposed for the monitoring and evaluation of the implementation of any study / project recommendations that shall be executed by the Do CI. The key role of this unit would be to monitor the achievement of minimum goals as stated in the study and the related performance measures during its implementation phase. This unit would be headed by an officer of the rank of an Addl/ JDIT and its key responsibilities would be to
Create a project tracker mechanism to monitor implementation of the BPR exercise vis-à-vis the minimum goals.
Conduct a Baseline assessment of the current situation for the various performance measures to be tracked.
Report the progress of the implementation against the milestones define and the timelines.
Review progress and take corrective action when required based on evaluation of the progress.
Highlight deviations from plans and create alternate approaches to get progress back on track.
Present to appropriate authorities the project progress and seek feedback of improvements in project implementation.
Regularly evaluate the impact of the implementation as compared to the Baseline assessment and the gap with the performance measures.

The Directorate of Continuous Improvement would be headed by a DGIT(DoCI) .The Continuous Improvement Unit of this directorate would comprise of 2 DsIT, 4 Addl.CsIt, 4 DCsIT and 2 ITOs .The group C requirements would be 3 ITIs , 7 Stenographers, and 13 Group D. However the same shall be dynamic and may require change depending on the number and type of projects that are being implemented by the Unit at a given point of time.
Knowledge Management Unit
A specialized Knowledge Management Unit has been proposed to be created that will help institutionalize methods for sharing and leveraging knowledge. The KM system would drive and reinforce a knowledge culture, synergize efforts at retaining and leveraging knowledge to enable employees to enhance their performance based on this knowledge.
Designation
Role and Responsibility
DGIT
(Continuous Improvement)
KM Leader would be responsible for managing the entire KM System. This would include:
o Monitoring functioning and utilization of KM System;
o Change management: Setting up of a KM System would require change management from the aspect of promotion of awareness of KM System,
o Coordinating with CBDT, Other Directorates: KM Leader would interact with the CBDT on a regular basis. This would smoothen the process of obtaining information and feed back from the management.
Continuous improvement: Tax law is a dynamic field. It would be the responsibility of the Leader that KM System adapts and improves to match the requirements.
o He would be assisted by a 02 Addl. CIT, who would help in management of KM System and processing of information sources at central level.
Select CCsIT (Part Time role)
KM Steering Committee would define KM Policy and would also undertake following functions:
o Review quality of information entering the KM System
o Monitor feedback for improvement in KM System
o Act as catalyst for overall adoption and success of KM System.
o Ensure that KM is playing vital role in line with organizational objectives and is creating a learning organization and promoting employee self learning and training.
o Monitoring and evaluating progress of KM and knowledge sharing culture and activities, and making appropriate changes to policy to motivate the same at organizational and individual level.
o Identification of subject matter experts for “Ask an Expert”.
Identified Experts (Part Time role)
An Expert would review the information (in specified cases) being uploaded on KM System and would also respond to tax related queries of ITD personnel. All the identified experts would have a defined domain expertise and only queries pertaining to that domain would be directed to them.
DIT (KM) under DGIT (Continuous Improvement)
KM Co-ordinator would support KM Leader in managing the KM System and would be responsible for entire coordination in the KM System i.e. Coordination with the Steering Committee, Regional Committees, Experts, Help Desks and Central / Regional KM Teams etc.
Directorate (Continuous Improvement)
Central KM Team would consist of 02 Additional Commissioners, who would be supported by a 02 DCIT, 04 ITOs, 06 Technical Resource and complimentary Group C Staff. One Addl. Commissioner would be assigned the following information areas:
o CBDT Information
o NADT and RTI
o Information in Public domain
o Work Aids
He would be responsible for reviewing the KM inputs from above central sources and would get the input reviewed by the Subject Matter Experts (if applicable) and present it to the identified regional committee for approval.
Second Addl. Commissioner would manage following aspects of KM System:
o Blogs
o KM Help desk
o KM IT Support
o KM support (Regional coordination)

Each of the Addl. CIT in his team would have support staff i.e. Technical Resources and Group C personnel would assist in collation, sanitization, structuring and release of data for the above listed information areas. They would also help in regional coordination and research. There would be a dedicated IT Support team. Functions of IT Support Team would be:
§ Management of IT Infrastructure
§ Portal Management
§ Coordinating access control
§ Data structure improvement
The Information Technology support team would be responsible for ensuring that all IT tools and systems address ITD user requirements and provide a helpdesk support for IT related issues.
Select Regional CCsIT / CsIT (Part Time role)
KM Regional Committee would constitute of select CCsIT / CsIT in each region. Committee would review and approve the contents made available to it by the KM Teams.
Select ITD Personnel under each CCA-CCIT
KM Regional Team would consist of an Addl. Commissioner (Part time under each CCA-CCIT) and full time ITO and 2 Technical resource. personnel. The Addl. Commissioner would be responsible for reviewing the KM inputs received from his region. He would then get the input reviewed by the identified experts (if required) and present it to the regional committee for approval.
ITO and the Technical resource persons would assist him in collation, sanitization, structuring and release of data to KM system.
ITD Personnel
(KM Users)
o Use the KM System
o Provide knowledge identified by them into the KM System
o Provide feedback for further improvement of KM System.

The Knowledge Management Unit of this directorate would comprise of 1 DIT, 20 Addl.CsIT- 2 Addl.CsIt at the centre/Delhi with 18 Addl.CsIT (Part Time) at the 18 CCAs i.e. 1 Addl.CIT at each CCA region, 20 DCsIT- 2 DCsIT at the centre/Delhi with 18 DCsIT at the 18 CCAs i.e. 1 D CIT at each CCA region, and similar formation of 24 ITOs(4 + 18) .The requirement of Technical personnel is 42 of which 6 would be located at the centre/national level and 36 for the 18 CCA regions i.e. 2 Technical persons at each CCA region. The group C requirements would be 3 ITIs , 7 Stenographers, and 13 Group D at the national level and complimentary at the CCA region level. However the same shall be dynamic and may require change depending on the number and type of projects that are being implemented by the Unit at a given point of time.
Directorate of Risk Assessment
The Directorate of Risk Assessment has been created to monitor the risk assessment mechanism which will identify the target cases for scrutiny, search and survey, define variability of outcomes around expectations and appropriately set in motion the machinery required to handle such risks. To ensure that there is focused attention towards this activity, a dedicated structure for Risk Assessment is being proposed. The Directorate is being formed to interface with the CBDT, other Directorates and other Revenue Bodies and Intelligence Cells.
The Directorate will be headed by a DGIT who will be the overall in-charge and will supervise the functioning of this Directorate. It further consists of 3 functional units
Strategic Analysis Unit,
Criteria Selection and
Feedback Unit and Risk Operation Unit.
The Risk Operation Unit will be located at one of the locations of the RPC once it is created. The Strategic Analysis Unit and the Criteria Selection and Feedback Unit will be headed by a DIT each. The Criteria Selection and Feedback Unit will work closely with the Risk Assessment Steering Committee which will consist of selected CCsIT/DGIT and CsIT. The Risk Operations Unit will be headed by an officer of the rank of Addl / JCIT and will be supported by a team of DCIT/ACIT/ITO and technical resources. The risk operations team shall be located at any one of the RPCs
The role of each of these 3 units is as follows:
The Strategic Analysis Unit: will co-ordinate with CBDT, Other Directorates, other Revenue Bodies and Intelligence Cells. It will ensure regular, correct and complete receipt of information from external and internal sources ,analyse the high risk cases ,study the Pattern Recognition analyse the intelligence and other real time inputs available and apply / feeding into the system and provide triggers for further investigations, internal reviews
The Criteria Selection & Feedback Unit: will decide the selection criteria for risk assessment under directions of CBDT will assist the board in deciding the number of salary cases, business cases, corporate cases and other cases to be picked up for scrutiny in each category and its sub-category, help in ensuring that system adapts and improves the selection criteria based on the feedback received from the user groups and the results shown by random cases .It will determine selection criteria for risk assessment .and undertake selection & defining of criteria for selection of cases for scrutiny, pink return and stop-filer/ non-filer
The Risk Operations Unit (to be located at the one of the RPCs once they are created): will be responsible for comparing the returns filed during the last two years with the returns that have been filed in the current year and identify a stop filer, generate list of non filers from TDS and third party information ,will undertake coordination and sending information relating to the stop filer/non filer including pink returns ,Generation of CASS list based on criterion determined by the Criteria Selection & Feedback Unit.

Directorate of Taxpayer Services:
As one of the key areas envisaged in the vision of the Department, it is essential to create a dedicated unit for specialised attention in this area in line with the best practices in all developed tax administrations.
In our Department we need to go beyond and extend the nature of rendering taxpayer services from beyond printed booklets, media campaigns etc, to more precise and specific aspects of tax payer service to cater to the needs of various categories of taxpayers especially, the smaller taxpayers who widen the tax base though not contributing large revenue. Hence, dedicated units are required at all places to undertake this specialised work throughout the year. Identification of channels through which the taxpayer service is delivered, management of channels, identify areas of taxpayer education, content management of taxpayer education efforts etc have all to be addressed in a comprehensive manner, policy decisions to be taken and methods of implementation to deliver standardised taxpayer service by this Directorate.
In addition grievance redressal policy and its implementation through a standardised format would also be assigned to this Directorate.
Main functions of Grievance redressal and Taxpayer Service are detailed below.
Grievance Redressal: The key functions of grievance redressal would involve:
Formulation / updation of guidelines on mechanism for submission, redressal and communication to taxpayers on the grievance requests.
Tracking of all grievances nationally and ensuring grievances of taxpayers are recorded, promptly redressed according to the laid down timelines/guidelines through active monitoring of service levels.
Co-ordinate with field deployments to ensure the grievance redressal mechanism is functioning as desired.
Ensure effective working of mechanism for allowing escalations to superiors to monitor redressal of grievances and to provide inputs for improving the system/process.
Provide regular feedback to concerned officials on status of grievances received and resolved.
To identify process & policy failures emanating in large number of grievances and finding a systematic solutions and policy inputs for the same for the same.
This function would be headed by an official of the rank of a DIT and would report to the DGIT Taxpayer services. The DIT would be supported by an Addl / JCIT for monitoring the grievance redressal mechanism.
Taxpayer Education: The taxpayer education unit would be responsible for:
Identifying the mediums for taxpayer education/campaign.
Taking tax payer education beyond the current prevalent newspaper advertisement mode. Devise innovative methods for reaching out to the taxpayers based on segmentation of the taxpayers and developing strategies around the differential needs of the taxpayers.
Spearheading the introduction of all taxpayer service initiatives.
Responsible for devising an effective communication strategy, organize campaigns around general awareness and special events / dates. It would also coordinate with the regional and local offices to ensure implementation.
Develop material for all taxpayer communication in terms of content which will be circulated as pamphlets, taxpayer information brochures etc.
Monitor all taxpayer service performance measures and other MIS reports that are generated. Forward reports to appropriate action based on this.
Drive a culture of Taxpayer service within the Department.
Conduct independent surveys for taxpayer service to understand the expectations of the taxpayers and take action on the areas that require improvement.
This function would be headed by an official of the rank of a DIT and would report to the DGIT Taxpayer services. The DIT would be supported by an Addl. / JCIT for designing and implementing taxpayer education strategies for the department
The Directorate would be headed by a DGIT at the national level and would be overall responsible for all taxpayer services and monitoring of grievance redressal.
( further inputs on emerging areas to be included, in respect of the requirements of posts in off-shore stations/embassies)
4.9. Training
4.9.1 Training is an activity the importance of which cannot be emphasised enough. Particularly in a knowledge-based organisation like the Income Tax Department, where the legal, commercial, macro/micro-economic parameters and environment goes through continuous change, adequate and frequent training of officers and staff is essential. A study carried out revealed the shocking statistic that the number of days of training imparted to Group Á’, ‘B’& Ç’employees in the department was only 3 days, 2 days and 1 day per annum. This is clearly a cause for concern. In can be readily appreciated that when the assessing /enforcing officers are not abreast with the legal developments and the staff side are not fully conversant with and therefore unable to properly make full use of technology inducted, there is bound to be loss of efficiency. As a result, a considerable quantum of revenue would be lost every year. The situation calls for urgent remedial action.
4.9.2 Accordingly, it is proposed to set up three new Regional Training Institutes at Bhopal, Patna and Delhi, each to be headed by an officer of the rank of CIT (SAG). The two posts of Additional Director General (National Academy of Direct Taxes, Nagpur) are proposed to be upgraded to HAG level, looking to their enhanced responsibilities and the need to post more experienced and senior people there.
4.10 Reserves
4.10.1 Every Organised Group A Service has Reserves for officers posted on Deputation, those on Leave and those on Training and Probation. The prescribed ratio in IAS for these Reserves is as under:-
Deputation Reserve 20% of posts in STS and above
Leave Reserve 3.5% of posts in STS and above
Training & Probationary Reserve 16.5% of posts in STS and above
4.10. 2 The IRS does not have any Reserves at all at present. This situation is not desirable since it leads to operational difficulties..
4.10.3 The absence of Reserves in various cadres and the need to rectify the situation was the “raison-d’être” for making the process of cadre review an essential feature of cadre management and planning in Government, after a Study Team on Personnel Administration (Personnel Planning, etc.) (1967) (1) had pointed out certain deficiencies in the management of cadres under the administrative control of various central Ministries. For instance, the Team observed that no deputation reserves were provided for in a large number of cadres and where they had been provided for, they proved to be chronically inadequate. It further pointed out that the provision made for training and leave reserves was equally unsatisfactory. Since no cadre could be considered viable without an adequate provision for various reserves, the Study Team recommended that reserves of suitable proportions should be built into every Service/cadre. This also found mention in the recommendations the Administrative Reforms Commission in its Report on Personnel Administration released in 1969 which impressed upon the need for cadre reviews per se, and further that such reviews should include the element of Reserves.
4.10.4 It is in the light of the above and the various existing guidelines on the nature and strength of reserves that the various reserves have been proposed for the IRS Cadre.
4.10.5 Probationers Reserve, Training Reserve and Leave Reserve: Direct recruits to the IRS are normally given initial training for a period of 18 months. The posts against which they are shown during the training period, which includes post-entry institutional as well as on-job training is required to be shown separately as probationers reserve. As the period of training of a probationer is one and a half years, the size of probationers reserve would be equal to 1.5 times the average size of one batch of direct recruits. As the intake to the IRS varies from year to year, the maximum recruitment in one year, i.e. 150 (that is, the probationers who joined in December 2008) is being taken as the basis for determination of size of reserve, which is being proposed as 225. Further, the IRS being a Service, dealing with the gamut of specialized functions requiring continuous skill upgradation through training, the need for adequate training reserves cannot be overemphasized. Based on the above need that has been elaborated elsewhere in this report, the total Training reserve, including Probationers’ Reserve of 225, is being pegged at 422, and Leave Reserve at 42, based on the information available on its actual utilisation.
4.10.6 Deputation Reserve: Over the last few years the number of officers from IRS who have been on Deputation has hovered at around 200, even though there are a large number of organizations where the expertise of the officers is required given their specialization in taxation and financial matters, and a large number of officers cannot be released for deputation in spite of their being suited for the same and in spite of demands from Government organizations because of the total absence of any reserves in the cadre. Keeping in view (i) the existing instructions in the matter, (ii) the cadre size, (iii) the needs of the outside (or ex-cadre) agencies for the services of IRS officers having regard to their experience and expertise, and (iv) the requirement that reserves should bear a reasonable proportion to the duty posts in the cadre, the number of deputation reserve is being pegged at 250.
4.10.7 The absence of any Reserves at present is against the established norms. In fact, CAT, Lucknow Bench in their decision dated 10.01.208 in OA 123/2003 had directed that the Recruitment Rules of IRS should be amended so as to provide for Reserves and other factors on par with other All India Services/ Central Services. This issue has already been taken up in the ongoing revision of Recruitment Rules, which is presently in an advanced stage of consideration. In the interregnum, some posts would be needed so as to immediately address the mismatch between the requirements and availability of manpower in the Department. The Committee accordingly recommends that Reserves comprising of the following posts should be created for the cadre:-
Deputation Reserve = 7% of posts in STS & above = 296 posts
Probationer’ & Training Reserve = 422 posts
Leave Reserve = 1% of posts in STS & above = 42 posts
Total = 760 posts
Thus, an additional 760 posts will be needed to be created towards Reserves.

5. INTER-SERVICE COMPARISON
5.1 Timelines for Promotion
5.1.1 i. Pay Commission
The Fifth Central Pay Commission, while dealing with the model cadre structure for Group A Services, recommended the following timelines for promotion to various levels:
Timelines for promotion in Group ‘A’
Grade
Years of service
STS
4 yrs
JAG
9 yrs
NFSG
14 yrs
SAG
17 yrs
HAG
25 yrs

5.1.2 ii. Recruitment Rules & DOPT Guidelines
As per the Recruitment Rules of the Indian Revenue Service, the following eligibility criteria for promotion to various levels have been prescribed, which are in line with the model recruitment rules for Central Group A Services prescribed by the DOPT:
Timelines for promotion in IRS (as per Recruitment Rules)
Grade
Years of service
STS
4 yrs regular service in Group A
JAG
9 yrs regular service in Group A
NFSG
14 yrs regular service in Group A
SAG
17 yrs regular service in Group A
HAG
3 yrs service in SAG (20 yrs)
HAG+
NO SUCH POST/SCALE IN IRS
Apex Scale
NO SUCH POST/SCALE IN IRS

5.1.3 iii. Actual
In the IRS, the following position obtains (as on 1.1.2009):
Promotion in IRS (actual time taken)
Grade
As per RRs
Actual
Remarks
STS
4 years
4 years
--
JAG
9 years
10 years
Promotion is delayed by 1 year
NFSG
14 years
14 years
--
SAG
17 years
21 years
Promotion is delayed by 4 years
HAG
20 years
33-34 years
Promotion is delayed by 13-14 years
HAG+
--
--
NO SUCH POST/SCALE IN IRS
Apex Scale
(Secretary level)
--
--
NO SUCH POST/SCALE IN IRS

5.2 Threshold Analysis
5.2.1 In contrast to the above, the comparative position vis-a-vis other Central Services Group A is as under:
Threshold Analysis (Central Services Group A)
SERVICE
HAG +
HAG
SAG
JAG/NFSG
IFS
1974 (34)
1976 (32)
1988 (20)
1995 (13)
IAAS
1972 (36)
1979 (29)
1991 (17)
1995 (13)
1999 (9)
IRTS
1972 (36)
1975 (33)
1987 (21)
1997 (11)
ICAS
1971 (37)
1979 (29)
1988 (20)
1998 (10)
POSTAL
1971 (37)
1979 (29)
1985 (23)
1993 (15)
1994 (14)
IDES
NA
1973 (35)
1981 (27)
1985 (23)
1991 (17)
ICCES
1969 (39)
1975 (33)
1987 (21)
1994 (14)
1997 (11)
IRS
NIL
1974 (34)
1986 (22)
1993 (15)
1997 (11)
Source: DOPT (as on 1.4.2008)
5.3 Cadre Structure
5.3.1 The comparative cadre structure and structural ratios of IRS and other Central Services are given below:
Cadre Structure (Central Services Group A)
SERVICE
HAG +
HAG
SAG
JAG/NFSG
STS/JTS
TOTAL
IFS
34 (4.93)
35 (5.08)
188 (27.29)
169 (24.53)
263 (38.17)
689
IAAS
8 (1.15)
25 (3.60)
110 (15.85)
160 (23.05)
391 (56.34)
694
IRTS
13 (1.22)
29 (2.72)
164 (15.37)
375 (39.15)
486 (45.55)
1067
ICAS
3 (1.96)
3 (1.96)
25 (16.34)
46 (30.07)
76 (49.67)
153
POSTAL
7 (1.49)
20 (4.26)
58 (12.37)
91 (19.40)
293 (52.48)
469
IDES
1 (0.85)
6 (5.08)
12 (10.17)
36 (30.51)
63 (53.39)
118
ICCES
7 (0.28)
47 (1.90)
295 (11.95)
593 (24.03)
1526 (61.83)
2468
IRS
0 (0.00)
116 (2.77)
723 (17.28)
1253 (29.95)
2092 (50.00)
4184

Structural Ratios (Central Services Group A)
SERVICE
JAG TO TIME SCALE
JAG + TO TIME SCALE
SAG + TO JAG
SAG + TO TOTAL DUTY POSTS
SAG + TO
STS
IFS
64.26
161.98
152.07
37.30
125.98
IAAS
40.92
77.49
89.38
20.61
55.86
IRTS
77.16
119.55
54.93
19.31
63.98
ICAS
60.53
101.32
67.39
20.26
50.00
POSTAL
31.06
60.07
93.41
18.12
37.61
IDES
57.14
87.30
52.78
16.10
52.78
ICCES
38.86
61.73
58.85
14.14
58.07
IRS
59.89
100.00
66.96
20.05
67.66
Source: DOPT (as on 1.4.2008)
5.4 Stagnation Ratio
5.4.1 It can readily be seen from the above tables that the IRS is at a disadvantageous position compared to other Central Services. As a matter of fact, the stagnation ratios in different grades reflect this position. In the higher grade, the number of officers stagnating (ie., not promoted to the next higher grade for want of vacancies, although eligible to be promoted) is more than 76% of the strength of that grade. This can be clearly seen from the following Table:
Stagnation Ratios (Indian Revenue Service)
(as on 1.1.2009)
Grade
Feeder Grade
Eligibility for promotion (years of service)
Batch eligible for promotion
Batch fully promoted
Delay
No of eligible officers awaiting promotion in the feeder grade
Total strength of the feeder grade
Stagnation Ratio
HAG
SAG
25
1984
1974
10 yrs
560
731
76.6 %
SAG
NFSG
17
1992
1987
5 yrs
556
606/
(1253)
91.8
(44.4)#
JAG
STS
9
2000
1997
3 yrs
268
1358
19.7 %
# If NFSG & JAG together are considered as the feeder grade
5.5 Structural Ratios
5.5.1 The promotional avenues of IRS officers are severely blocked, resulting in stagnation/delays in promotion. A contributing factor in this regard is the low number of posts at higher levels. Another important fact is the absence of two higher scales i.e. HAG+ and Apex Scale. An analysis of the Cadre Structures of various Services reveals that the ratio of posts at HAG and above to SAG, and the ratio of posts at HAG and above to total cadre posts in the IRS is very low compared to other Services.
SERVICE
HAG +
HAG
SAG
JAG/NFSG
STS/JTS
TOTAL
HAG and above to SAG
HAG and above to Total
IFS
34
35
188
169
263
689
36.70%
10.02%
IAAS
8
25
110
160
391
694
30.00%
4.76%
IRTS
13
29
164
375
486
1067
25.61%
3.94%
ICAS
3
3
25
46
76
153
24%
3.92%
POSTAL
7
20
58
91
293
469
46.55%
5.76%
IDES
1
6
12
36
63
118
58.33%
5.93%
ICCES
7
47
295
593
1526
2468
18.31%
2.19%
IRS
0
116
723
1253
2092
4184
16.04%
2.77%
Source: DOPT (as on 1.4.2008)
5.6 Number of Posts Required as per Guidelines
5.6.1 From the table showing the stagnation ratio in the IRS, is seen that in order to ensure promotion to HAG in 25 years (which is the stated norm) the number of posts required to be created at HAG level would be 560. If this were done, it would also ensure promotion to SAG and JAG in the prescribed time-frame of 17 and 9 years. It must however be emphasised that this result can be obtained only if the huge number of posts (560) are created at HAG level.

6. THE PROPOSAL
The Proposal: Functional justification of upgradation to Sr. CIT
3.3.7 The three models discussed above would have resulted in an inordinate increase in the cadre strength on the assessment side. Such an increase would place a huge financial burden on the Government. The Committee has, however, followed a policy of not creating additional posts in the higher grades. Instead, posts in the higher supervisory grades have been given additional responsibilities and suitably upgraded. This process also automatically addresses the existing anomalies in the IRS cadre where no posts exist in the highest two grades of HAG+ and the Apex Scale. Additional posts have only been proposed in the grade of CIT and lower grades. While working out the revised cadre strength, the span of control of Range heads has been increased by giving six Assessing Officers (1 TRO + 5 AOs) to a Range as against the present five (1 TRO + 4 AOs) and the number of taxpayers per Range has been increased to 48900 as against 33000 at the time of last restructuring. This will result in increased workload for all the higher posts as well since the existing norms of 3 Ranges to a Commissionerate are not being diluted despite a substantial increase in the number of taxpayers. The span of control of administrative Commissioners will increase from 21 Group A or B assessing officers/supervisors to 24 Group A or B assessing officers/supervisors. The number of taxpayers per administrative Commissioner will increase from 100,000 to 146,724 at the present and to 188,200 in 2011-12. It needs to be emphasized that presently, the county is divided into 229 Administrative CITs, a post most crucial to administration of income tax department in all spheres. It has maximum administrative, supervisory, judicial and financial responsibilities. Each CIT has over 160 officers and staff to manage along with their establishment and vigilance ramifications. He is also responsible for all financial sanctions to conduct the routine affairs, and is the HOD. The CsIT in Central and DIT(Exemptions) also perform similar task. The number of Returns per CIT has gone up from roughly one lac in 2001 to 1.48 Lacs in 07-08. Each CIT has now been additionally burdened with reviews of 180 top scrutiny assessments per year, which was never envisaged in the re-structuring of 2000. This demands single minded application and consequent revisionary steps. Further, all Administrative CsIT have been entrusted with rectificatory steps for each case of leakage of revenue of Rs. 1 Lac that arises out of audit objection. They also have to deal with all cases u/s 12A and 80G. With Charitable activities increasing, the workload has substantially gone up. Diversion of income is also rampant in this area. The Administrative CsIT are also responsible for all collection and recovery matters. In spite of being saddled with all these responsibilities, the post of Administrative CIT as an institution has risen to meet the challenge and per CIT collection has gone up from Rs. 268 Crs. (67,917/229+23+1=253) to Rs.1127 crores (314,468/(229+23+20+7=279) in 2007-08 , an increase of 400% in 7 years. Despite the increase in their workload as well as the level of responsibilities, an exponential increase in their number is not being recommended because operationally, it is difficult to break the unit of Administrative CIT into smaller ones, as in that process uniformity of approach which is so vital to the effective and cohesive functioning of the department with be lost leading to increased litigation. Smaller units will also mean more officers and staff at each level which, apart from a very high financial cost, will become cumbersome to manage. In next 5 years, the number of taxpayers, workload and infrastructural requirement of a changing hi-tech environment will take a heavy load on these officers unless their higher responsibilities are recognised. Since the skill required is highly intellectual and variegated, these officers should be given due acknowledgment with moderate increase in support structure. At present officers of 13 batches (1976 to 1988) are in the grade of CIT. Therefore a distinction has to be made between the CsIT, in-charge of overall administration, assessment and searches and Directorates having All-India jurisdiction vis-a-vis the other CsIT like those in Appeal, Audit, Computer operations, TDS etc. It is accordingly recommended that CsIT, in-charge of overall administration, assessment and searches should be upgraded to the grade pay of Rs. 12,000/- from the present Rs. 10,000/-. This means a tiny enhancement of Rs. 2000/- P.M. only, in addition to one more increment of Rs. 1,800/- (roughly). This will entail a total burden of Rs. 4,600/- PM (including DA) per CIT which is an extremely nominal advancement of their compensation in comparison to the onerous responsibilities that they undertake, 346 posts of existing CITs need to be upgraded to Administrative CIT which is absolutely essential to meet the additional work load in specific regions enumerated in the preceding paragraphs.
The cost of upgrading the posts of Administrative CIT works out to Rs. 1 crore per annum. This cost needs to be seen in the context that the earlier formula of providing one CIT for one lakh taxpayers would have entailed increasing the existing number of 229 administrative CsIT to 504 at an additional cost of Rs. 18.92 crores per annum on creation of these additional posts of CIT in the grade pay of Rs. 10000. Hence, there is a resultant savings of Rs. 17.92 crores per annum.
Upgradation of CCIT posts ( Scale of Rs.75,500 – 80,000): Functional justification
As present there are 74 posts of CCsIT in the grade pay of Rs. 12000 in PB-4 excluding CCsIT(CCA) and DGsIT. As has been already mentioned, IRS cadre has no post in the pay scale of Rs. 75500-80000. Further, as a policy, no post is being sought to be created at the higher scales. (Each CCIT has at present only 2.6 Administrative CsIT whose work load has been substantially increased as has been seen in the previous paragraphs). Now, each CCIT is entrusted with the work of approvals for filing appeals before the High Courts, processing of High Court judgements for filing of SLPs, granting of exemption under section 10(23C), rectificatory measures for all audit objections over Rs. 1 lakh, approval of retention of documents under section 133A, sanction of prosecution of all kinds of defaulting taxpayers, approval of hospitals for the purpose of 17(2), approval of reduction or waiver of penalty under section 273A. Further, administrative work like approval of proposal for write off of arrears, implementation of official language policy, implementation of computerization in the Department are also his responsibilities. In addition, normal supervisory and other administrative functions to be discharged include review of arrear demand dossier, collections, transfer and posting of officers upto the level of Additional Commisssioners (NFSG in JAG) and all levels of officials, grievances of both employees and taxpayers, apart from the most crucial functions of supervision of the work of both CIT(Administration) and CIT(Appeals).
Jurisdiction of CCsIT is also being substantially enhanced with 3.03 administrative Commissionerate as against 2.6 at present and 3.03 Commissioner (Appeals), as against 2.6 at present. The Chief Commissioner will now be responsible for 442,300 taxpayers as against 300,000 taxpayers earlier, which will further go upto 569,600 taxpayers in 2011-12. Thus with such stupendous increase of their workload and responsibilities, these officers deserve to be upgraded to the scale of Rs. 75,500 -80,000. The government also in its notification has decided to carve out this scale of pay for officers out of the existing pay band 4. At present, officers of 73 batch to 76 batch are in these posts. If 74 such posts are upgraded, then only officers up to middle of 75 batches will be promoted, which means they will be on the verge of retirement after having put in 34-36 years of service. Besides there will hardly be any financial implication of such upgradation apart from one increment of about Rs.2250 as all of these officers would be drawing total of 75,000 including grade pay of Rs.12,000. Hence the upgradation of 74 posts from existing grade pay of Rs.12,000 to scale of Rs.75,500 – 80,000 is proposed.
Cadre Controlling Authorities :CCsIT( CCA)/ DGIT – (Rs.80,000): Functional justification
In addition to the sphere of control of 6.06 CsIT and 72 group A and B assessing officers/supervisors as proposed for other CCsIT, the Cadre Controlling CCsIT (Principal CCsIT) have also been made responsible for CIT(TDS) (supervising 21 Group A and B assessing officers/supervisors); CIT(Audit) (strength of 21 Group A and B officers); CIT (Helpline); CIT (Hqrs), CIT(Judicial) and CIT (Computer Operations). The Cadre Controlling Chief Commissioner (Principal Chief Commissioner, as proposed) is also responsible for cadre management of all Group B, C and D posts in the entire region.
Further, CCIT (CCAs) /(Principal CCsIT) have control over the entire cadre, spread usually over more than one state. For example, the CCIT (CCA) (Principal CCsIT) of North-West Region would have oversight and administrative span of control over five states, i.e., Punjab, Haryana, Himachal, UT of Chandigarh and J&K. The same geographical area will have five DGPs from the Police and five PCCFs from Forest Service as well as similarly placed officers of other departments of State governments. Similar will be the case in the North-East Region. In fact, barring two regions, in every other region, the CCIT (CCA) /(Principal CCsIT)’s span of control would extend beyond one state. Similar would be the case with DGIT (Investgation.). There are only 14 of them for over 30 states and UTs who will bw always coordinating with the senior-most officers of all enforcement agencies. The DGIT ( Intelligence) has the jurisdiction over the entire country where he has to routinely interact with apex scale officers of every other department.
The CCIT (CCA)/ (Principal CCsIT) would oversee vigilance, establishment, finance, deployment of manpower, staff unions interface and other matters relating to administrative and financial control in respect of the cadre for the entire region. The CCIT (CCA)/ (Principal CCsIT) would also coordinate for their region with the CBDT as the CBDT very often interacts with the field formations only through CCAs.
Hence, the role and functions of the Principal (CCA) and DGITs are functionally distinct and separate from those of other CCsIT, involving much higher and expanded levels of responsibility as already discussed in the foregoing paragraphs. Thus 42 such posts should be upgraded to the pay scale of Rs.80,000.
Based on the foregoing analysis, the following overall requirements, showing the existing and proposed structures emerge for the IRS and the entire IT Department:
A: REQUIREMENTS FOR THE IRS:
Existing and Proposed Cadre Structure (IRS)
Sr. No.
Post
Pay Scale
Number of Posts
Ann. Financial Implications
(Rs. in crore)
Batch Promoted*
Present
Proposed
Additional
As per Present Structure
As per Proposed Structure
1
Principal CCIT/DGIT
Rs. 80,000 (fixed)
Nil
42
0
.06
-
1973
2
CCIT
Rs. 75,500 – 80,000
Nil
74
0
.11
-
1975
3
Senior CIT/DIT
Rs. 37,400-67,000 + Grade Pay of Rs. 12,000
116
(Surrendered)
346
0
1.00
1975
1981
4
CIT/DIT/Equivalent
Rs. 37,400 – 67,000 + Grade pay of Rs. 10,000
731
(346 Posts Surrendered)
510
+125
8.60
1988
1991
5
Addl. CIT/DIT/Equivalent
Jt. CIT/DIT/Equivalent
Rs. 37,400 – 67,000 + Grade pay of Rs. 8700
Rs. 15,600 –39,100 + Grade pay of Rs. 7600
1253
1528
+275
13.84
1998
1996
6
Dy.CIT/Dy. DIT/Equivalent
Rs. 15,600 – 39,100 + Grade Pay of Rs. 6600
1358
1560
+202
6.51
2005
2005
7
Asstt. CIT/Asstt. DIT /Equivalent
Rs. 15,600 – 39,100 + Grade pay of Rs. 5400
734
847
+113
3.44
-
-
8
Reserves
Rs. 15,600 – 39,100 + Grade pay of Rs. 5400
Nil
730
+730
22.26
-
-
Total
4192
5630
1438
55.82


*last batch that has been promoted fully
B: FOR THE DEPARTMENT: Existing and Proposed Cadre Structure (I T Deptt.)
Sr. No.
Post
Pay Scale
Number of Posts
Ann. Financial Implications
(Rs. In crore)
Batch Promoted*
Present
Proposed
Additional
As per Present Structure
As per Proposed Structure
1
Principal CCIT/DGIT
Rs. 80,000 (fixed)
Nil
42
0
.06
-
1973
2
CCIT
Rs. 75,500 – 80,000
Nil
74
0
.11
-
1975
3
Senior CIT/DIT
Rs. 37,400-67,000 + Grade Pay of Rs. 12,000
116
(Surrendered)
346
0
1.00
1975
1981
4
CIT/DIT/Equivalent
Rs. 37,400 – 67,000 + Grade pay of Rs. 10,000
731
(346 Posts Surrendered)
510
+125
8.60
1988
1991
5
Addl. CIT/DIT/Equivalent
Jt. CIT/DIT/Equivalent
Rs. 37,400 – 67,000 + Grade pay of Rs. 8700
Rs. 15,600 –39,100 + Grade pay of Rs. 7600
1253
1528
+275
13.84
1998
1996
6
Dy.CIT/Dy. DIT/Equivalent
Rs. 15,600 – 39,100 + Grade Pay of Rs. 6600
1358
1560
+202
6.51
2005
2005
7
Asstt. CIT/Asstt. DIT /Equivalent
Rs. 15,600 – 39,100 + Grade pay of Rs. 5400
734
847
+113
3.44
-
-
8
Reserves
Rs. 15,600 – 39,100 + Grade pay of Rs. 5400
Nil
730
+730
22.26
-
-
9
ITO
Rs. 9300-34800 + Grade pay of Rs. 4800/5400
4448
5856
+1408
29.43
-
-
10
ITI
Rs. 9300-34800 + Grade pay of Rs. 4200
9793
13293
+3500
68.60
-
-
11
STA/TA
Rs. 9300-34800 + Grade pay of Rs. 4200/Rs.2400
19948
27198
+7250
134.74
-
-
12
DEO/Steno.
Rs. 9300-34800 + Grade pay of Rs. 4800/Rs.4200/
Rs.2400
6425
8256
+1831
34.03
-
-
Total
44806
65239
20433
322.62

*complete batch that has been promoted
6.1 Requirement on Functional Grounds
6.2 Requirement on Inter-Service Comparison
6.3 Recommendations
6.4 Matrix Showing Requirement & Deployment
i. Functional Distribution
ii. Implementation Schedule
It is proposed that the upgradation of posts would be done with immediate effect, as soon as the approval of the Government is received. However, so far as the newly created posts are concerned, they would be created and operationalised in a phased manner over a period of two financial years.
7. FINANCIAL IMPLICATIONS
7.1 Implications
7.2 Matching Savings

8. POST-REVIEW SCENARIO
8.1 Threshold Analysis Showing Impact of the Review

9. NON-IRS POSTS IN INCOME TAX DEPARTMENT
EDP cadre
At present, the number of sanctioned posts in EDP cadre are:

S.No.
Name of the Post
Pay Scale
Sanctioned Strength
Working Strength
1
Joint Director (Systems)
12000-16500
5
4
2
Deputy Director (Systems)
10000-15200
26
13
3
Assistant Director (Systems)
8000-13500
73
47
5
Data Processing Assistant Grade 'B'
6500-10500
55
20
6
Data Processing Assistant Grade 'A'
5500-9000
162
39

Total

321
123

4.5.1.30 Over a period of time, due to change in the field of Information Technology, growth in Networking Technology, considerable growth in the number of users accessing the system and to adopt the business models and practices followed worldwide in Tax Administration, the Government of India decided to revamp the Income-Tax Department to achieve the following :
(a) to provide world class facilities to the income-Tax payers;
(b) to Increase voluntary compliance of the Income-tax laws;
(c) to widen and deepen the tax base.
4.5.1.31 To achieve the above objectives, the Department sought approval of the Cabinet for full computerisation of Income-Tax Department which inter-alia included the following aims:
“Full computerisation of the Income Tax Department is necessary to ensure faster processing of returns and refund claims. This will enhance taxpayer satisfaction, introduce higher transparency and free part of the manpower for investigation. National databases of financial information so generated can be matched across the country with the information in returns of income, and that collected from other sources. The resultant higher level of deterrence will lead to increased compliance and higher revenues.”
4.3.1.32 Accordingly, with the approval of Cabinet, the Department has commenced implementation of the Perspective Plan of Computerisation by way of following indicative initiatives amongst others :
(a) to extend computerisation and network in all the 745 offices of the Department spread over 510 cities all over India by establishing hybrid MPLS (Multi Protocol Label Switching) based IP-VPN (Internet Protocol-Virtual Private Network) network that will connect all the offices of Department on to the TAXNET;
(b) introduction of e-Governance services to the taxpayers;
(c) consolidation of 36 regionally distributed databases into single National Database on the principle of ‘Single Application Single Database’ to serve its more than 12,000 internal users;
(d) by migrating from legacy 2-tier Application Architecture to 3-tier Architecture on Oracle RDBMS and Application Server 10g environment;
(e) Setting up of one active Business Continuity Plan (BCP) site and one passive Disaster Recovery (DR) site;
(f) Jurisdiction free Central Processing Centres on the principle of ‘any where any time filing’ of Income-Tax returns.
(g) De-Materialisation of TDS certificates.
4.5.1.33 In view of Government’s decision to implement the Perspective Plan of Phase III Computerization which, inter-alia, includes consolidation of databases and centralized processing in a 3-tier application architecture environment, it has now become inevitable that the EDP Cadre of the Department is appropriately structured, strengthened and nurtured, so as to ensure smooth, effective and efficient support, on an ongoing basis, for success of Department’s computerization efforts.
4.5..1.34 With the adoption of a new approach i.e. centralized processing and consolidation of databases, certain activities of the Regional Computer Centres and Computer Centres, particularly basic operations, are done away with while a few other specialised technical jobs are included. Moreover, as a result of outsourcing of some of the activities to intermediaries like NSDL and UTISL coupled with the engagement of various service providers viz, System Integrator, Network Services Provider and Data Centre Service providers, there is a paramount need to put in place appropriate management, monitoring and evaluation mechanism to achieve optimum functional efficiency as also to ensure the security of database and network. Thus, it will be necessary for the Department to have a strong and capable EDP force which could shoulder the responsibility of privacy and safety of this classified and confidential data of national importance in order to keep away every potential threat; be it from man or machine.
4.5.1.35 The total number of additional posts required in the EDP cadre is as under:-
Sr.No.
Post
Total number of posts required


Application Software Division
Systems Management Division
Evaluation/ Procurement Division
Hardware/ Software Maintenance Division
Training Division
CPCs
Field
Formations
Including Investigation wings
Total Requirement of Technical Manpower in EDP cadre



PDC
BCP
DR





1
Director (EDP/Technical)
2
2
0
-
1
1
4
0
10
2
Joint Director/Additional Director
12
4
2
-
1
1
9
4
22
55
3
Deputy Director
16
8
4
-
1
1
9
4
25
68
4
Assistant Director
23
8
4
2
2
1
9
4
26
81
5
DPA Grade 'B'
36
14
5
2
0
2
17
8
83
167
6
DPA Grade 'A'
36
14
5
1
0
2
17
12
202
289
Total



670

The following additional posts in the EDP cadre is therefore suggested:
S.No.
Post
Scale of Pay
Grade Pay
Total Requirement of Technical Manpower in EDP Cadre
Existing Sanctioned Strength
Additional Posts Required
1
Director (EDP/Technical)
Rs 37400-67000
8900
10
0
11
2
Joint Director/Additional Director (NFSG)
Rs 37400-67000 /
Rs 15600-39100
8700 /
7600
55
5
50
3
Deputy Director
Rs 15600-39100
6600
68
26
42
4
Assistant Director
Rs 15600-39100
Rs 9300–34800
5400
5400
81
73
8
5
DPA Grade 'B'
Rs 9300-34800
4200
167
55
112
6
DPA Grade 'A'
Rs 9300-34800
4200
289
162
127

Total


670
321
349

10. SUMMARY OF RECOMMENDATIONS

11. ANNEXURES
11.1 The Cadre Review Committee & Terms of Reference
11.2 Meetings Held
11.3 Methodology
11.3.1 During the course of deliberations, the Committee examined a large amount of information from multifarious sources. Information was gathered from the following sources:-
Guidelines on Cadre Review provided by the DOPT
Recommendations of the Sixth Pay Commission and earlier pay commissions
Structural ratios and growth avenues in other services
Meetings with IRS officers
Opinion survey of IRS, Group B & Group C
Meetings with Senior CCsIT
Meetings with Group B and C officers
Cabinet Note on Restructuring (2000)
Earlier cadre review reports
Study of systems in similar organisations e.g state revenue appeals department, advocate general setup, etc.
International best practice USA, Australia, Philippines, etc
11.3.2 Keeping in view the information gathered as above, the present scenario, future projections of revenue, litigation and other growth parameters the requirement of IRS cadre in the next five years has been worked out. Wherever feasible, growth in workload is recommended to be absorbed through state of the art technology. Data used in this report has been sourced from the various annual reports of the Comptroller and Auditor General of India.
11.4 Sources
11.5 Glossary