The department claims that the problem has arisen either due to wrong Permanent Account Number provided by assessees while paying tax or wrong PAN mentioned by the deductor while deducting TDS
Admitting that many income tax (I-T) refunds were still pending, the I-T Department on Tuesday decided to "clean up the mismatched TDS database" due to which the refunds were held up, reports PTI.
An I-T Department release said, "The Income Tax Department has taken the initiative to clean up the mismatched TDS database. Many refunds are pending with the I-T Department due to the mismatch of tax paid by the assessee, but the same is not being reflected in the computer software of the department."
The release said that the department is concerned about the same as the problem has risen either due to wrong Permanent Account Number (PAN) mentioned by assesses while paying tax or wrong PAN mentioned by the deductor while deducting the TDS of the deductee.
I-T Department officials have also commenced on the process of holding discussions with various bodies, including the I-T Advocates' Association and Industries Association, so that the issue of mismatched TDS data could be resolved.
"The adverse consequences of incorrect quoting of PAN are faced primarily by the deductee and, therefore, it is also his duty to provide correct PAN to the deductor and ensure that the same is mentioned during deduction of taxes," the release said.
The department has also decided to generate a list of persons in the next fortnight to identify persons whose refunds could not be issued due to the mismatch of TDS, so affected persons could take remedial action to resolve the issue.
NK Prasad, executive director and chief operating officer of Computer Age Management Services (CAMS), speaks on the various services offered by his company for investors, distributors and AMCs in an exclusive interview with Moneylife. This is the second and final part of a two-part series
Ravi Samalad (ML): How are the online services offered by CAMS, KARVY and Franklin Templeton different from each other? What is the product differentiation that CAMS offers?
NK Prasad (NP): In terms of services as RTAs what we provide is very similar to what a manufacturer wants to provide. Now each manufacturer has a certain degree of customisation. The customisation varies from manufacturer to manufacturer and our ability to support that customisation and our ability to give a reliable platform which continuously adds value to the customer is where there is a differentiation. The basic services like NAV allotment on the same day, allotment of NAVs itself, account statements, redemptions, etc are similar with both the RTAs. The service differentiation arises only on account of the other soft attributes in terms of resources, management focus, strategic direction and the support and value that you provide to your customer.
ML: How has been the response for NPS point of presence (POP) offered by CAMS so far? How many NPS subscriptions does CAMS get in a day?
NP: We are seeing an increasing trend. The scheme was launched on 1 May 2009 and this particular scheme is very unique in the sense that there is no intermediation and there is no investment in terms of advertising and communicating the benefits of this scheme to the investors. Everyone was in fact left to do their own to get customers. Initially the response was fairly slow but in December they did a good thing by coming up with the Tier-I account. This was a fixed account which did not permit any flexibility to the customer and Tier-II accounts have given some amount of flexibility. After the Tier-II (account) has come in and because of the Tier-II accounts, many people are opening Tier-I accounts and then Tier-II accounts because opening a Tier-I account is compulsory. We are slowly and steadily seeing increasing numbers. We track these numbers every week.
Secondly, the Pension Fund Regulatory and Development Authority (PFRDA) has decided to communicate the benefits of this scheme extensively to investors. They were waiting for certain clarifications. The Direct Tax Code (DTC) has given some clarifications about the EEE (Exempt-Exempt-Exempt) status of the scheme. They (PFRDA) have told us that they have some campaign which they are going to run in different languages. They have shared some presentations with us. We have shown these presentations to corporates. There is a credible track record of two-three years of NPS returns.
ML: What is the average size of the investments that you get?
NP: Average size could be slightly misleading in this particular case. It would not be an exaggeration if I tell you that the initial contribution runs into six-digit numbers. There are different kinds of investors who are investing. PFRDA asked us this question as to what happens if I remove the four minimum contributions as investments as a mandatory requirement. We said that it's fine and good for the investors. If the investor is going to have one footfall in a year and we get paid once it's fine with us and we have no issues because this is a long-term product. The rupee value of this is Rs20 per transaction, which is what we get paid, and Rs40 is for account opening. I think it's a reasonable number.
ML: What is your total investment in IT?
NP: We almost revamp our technology platforms every two years and that's the single-largest capital budget for us. In the past five years we have easily invested close to Rs50 crore in technologies like data centres, networks and applications.
ML: You manage data for 4.8 crore mutual fund investors like bank account details, address, contact details, etc. What data security mechanism does CAMS have in place?
NP: We have evolved over a period of 15 years and we recognise that our role is custody of data. We have no conflicting interest in any manner. Just like the AMC is the custodian of investor's money, we are custodians of data. We are extremely cognisant of the operational risks that are involved. For every operation that we have there are a series of checks and balances that are maintained and built around the system. A lot of it is in the system itself like maker checker control, authorisation control and audit trails. In addition to that there are a lot of counter controls like in the form of what we have changed here gets communicated to the investor. For instance, if you change the address there is a letter which goes to the old address and new address. So if it is not initiated by the investor then the investor knows that somebody has attempted to do it. If the investor has provided an email address or mobile number then it reaches them in the fastest possible way. These things ensure that there are hardly any risks and any fraudulent instances. In the 75 million transactions that we process, fraudulent cases have been negligible.
ML: Now that IRDA is going to regulate ULIPs, what impact will this move have on mutual funds?
NP: Different financial products have the ability to meet different needs of investors. One is an insurance-cum-savings product and the other one is a pure savings product. They do compete for the same investor's wallet but the recent changes that have come in are better for the investors and anything that is better for the investor results in greater adoption from the investor. Today hardly 7% of household savings go into mutual funds and it's a long way to go.
ML: Apparently, the regulator is very keen on boosting online trading platforms on stock markets which have not succeeded in generating volumes. Does this defeat the very purpose of long-term investment of mutual funds since investors can be inclined to book profits or switch between funds?
NP: The exchanges have just begun and I think they need to be given some time. It's not fair to conclude that there are not enough volumes and there is no potential. At this point of time and the way it is operating, it is yet another conduit available for investors. I still see that a lot of investors prefer to come to our brick-and-mortar offices to submit their forms even if it's a trouble for the investor. It's just a habit. It's a transaction between the fund and the investor. It's not like a secondary market. Assuming that an investor has got a trading account and is also a mutual fund investor, for him to switch between funds there has to be some compelling incentive.
ML: SEBI has brought in a slew of changes in the mutual fund industry. What more changes would you like to see as an RTA?
NP: All the changes initiated by SEBI have a common thread of investor protection, transparency and accountability. Some of them were path breaking like entry load ban which is difficult for the market to quickly digest. Our experience has been that any market which has given greater benefit to the investor at a lower cost, that market sees an explosive growth. It takes time for people to realise and understand that but it does see an explosive growth.
ML: What would be your next big step towards growth?
NP: We aspire to grow as a company. Our growth is more or less aligned to the mutual fund industry's growth as long as we continue to keep raising the bar which we always strive to do. Beyond mutual funds we see ourselves as a strong connector of customers to the manufacturer. If it's a financial service we can look at credit cards, NBFCs, life insurance and general insurance which connect customers to manufacturers. All of these manufacturers want a set of support (systems) in terms of transaction support and service support. If each manufacturer were to build their own infrastructure like IT, customer service and people, it is going to be very extraordinarily expensive. They can ride on a common service provider like CAMS which is completely neutral and which is agnostic to any industry. These manufacturers can provide their service to their customers in a customised format. This is the unique advantage that we take on the table. We believe as the outsourcing outlook improves in the domestic market, and as the market grows, we will enter into a similar category. There are many opportunities within the financial sector.