Govt Launches Nationwide IT Backbone Project For VAT

Kolkata: | Updated: Mar 11 2003, 05:30am hrs
The Union government has just created one of Indias largest e-governance projects by inviting proposals from big corporates or consortia to set up and manage a huge information exchange system that will be required once the country adopts the value-added tax (VAT).

With April 1, 2003, the scheduled date for the switchover to VAT nearing, the secretary to the empowered committee of state finance ministers has called for expressions of interest (EoIs) for the deployment of a VAT information exchange system or VINXSYS on a build-own-operate (BOO) basis. The VINXSYS will record all inter-state trade among the state VAT departments, and information pertaining to the dealers of all participating states.

The project, which was cleared at the March 4 meeting of the committee, is to be implemented on a managed service provider (MSP) model.

The response deadline: March 20. The system has to be operational by July 1 this year, with the systems requirement study and system architecture creation being the responsibility of the bidder.

Consultants and software companies see the project as one of the largest computerisation programmes ever in India, with the information network rivalling that of the Indian Railways reservation system.

Just as people can check out reservation status and buy rail tickets to and from any destination on the network, the countrys tax officials will be able to view any VAT-related transaction taking place anywhere in the country.

West Bengal alone has 1.13 lakh registered traders.

Industry sources feel that all major companies with interests in the telecom and software business will participate in the bidding process.

The notice specifies that companies participating in the bidding process should have a minimum revenue of Rs 100 crore and have a minimum operating history of one year.

In case of a consortium, each member of the group should have an operating history of at least one year and a turnover of at least Rs 25 crore, said the circular.

Mr Ramesh Chandra, secretary to the empowered committee, told FE that the creation of an all-India exchange system was decided at the March 4 meeting of the empowered committee.

The exchange system is the beginning of an initiative to create online information related to the business of all registered traders from the local and regional levels to the state to central levels.

Said Mr Chandra: It is certainly a very big project which will lead to the availability of any information on transaction done by all the registered dealers anywhere in the country. This is a big step forward towards the formation of an e-governance system in the country.

Sources in the empowered committee feel that the initial cost of setting up the exchange system will be around Rs 250 crore.

An Internet data centre will form the core of the VINXSYS, housing information on every transaction under VAT. This data centre will be connected to the states VAT systems via broadband connections.

The VINXSYS will have an exchange application software that will record each and every transaction, and also include a call centre to handle questions on the VAT information exchange.

The successful vendors revenues will come from the user states on a per transaction basis. The notice terms this as a subscription charge.

For the vendor, the revenue will come from the use of the system by the people and authorities concerned. This will depend on the revenue model the vendors propose, Mr Chandra said.

The success of the central system will depend on how the states can computerise their back-end facilities. To start with, all registered traders will be given identification numbers, according to an official of West Bengals commercial taxes department.

Allocation of identification number is the first stage in the creation of an uniform indirect tax system across all the states. Next comes the creation of a common platform and commonalty in terms of processes, he said.