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Smart Card
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Case Study: Electronic Tax Clearance Certificate
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Introduction
The state has a population of over 14 million residents, with over 5 million tax payers. For employed professionals, tax is deducted at source by the employers and deposited with one of the state affiliated bank. Such deposits may take place any number of times in a year. However the self employed people and people with limited income have to deposit their tax once every year.
At the end of the year, once whole income is declared by the payee and appropriate taxes paid, he or she is issued a Tax Clearance Certificate for the financial year under consideration.
Tax clearance certificate, especially of last three financial years, is often required. This requirement is laid down by nature of laws and bye-laws that requires tax-payers to prove that they are through with their tax liability by paying taxes as per their income. Some such requirements are ? Scrutiny by tax officer and department of internal revenue, getting a visa for flying abroad at various embassies, taking a bank loan, filing of subsequent year's tax returns, getting child's admission in school or college, availing benefits of state run medical and other subsidized facilities, etc.
Business Problems
The problem is multi-facet.
From Government Perspective
- Huge loss of revenues as people produce fake tax payment and clearance certificate.
- Non-ability to forecast anticipated revenues due to lack of availability of genuine documents.
- Matching claimed payments by payee against revenues collected by bank for government was a mind boggling exercise for every year. Tracing out the culprits was next to impossible given those forgeable paper documents.
- Issuing tax clearance certificate was a time taking and highly inefficient exercise.
- Understanding and analyzing tax payment patterns.
- Correlating documents of an individual payee.
From tax-payers Perspective
- Consolidating the complex paper documents for 3 years of tax.
- Maintaining number of paper documents.
- Queuing-up for release of duplicate papers in case of loss or damage to old paper documents.
- Non-accessibility of tax payment documents and clearance certificate, if required urgently somewhere.
- Proving authenticity of documents he is presenting.
- Long time delays in getting the tax clearance certificate even after making full tax payments.
From Banks' Perspective
- Checking the authenticity of tax-payment orders being presented by the payee
- Keeping a track of millions of documents produced every month
- Huge loss of revenue as fake tax-payment documents were being produced
From Embassies' and other agencies perspective
- There was no better way of establishing authenticity of document
- Analyzing and extracting tax figures and liability clearance from bunch of papers was a big deal
The Solution
BrickRed solved the problem by providing the department of internal revenue of the state government, a smart card based solution and supplementary software that laid the foundation of authentic documentation using the inherent strength of smart cards, the Security.
Smart cards are now used as the secured and authentic instrument for all tax matters. A tax payer carries the card with him every time he goes for paying tax, thus a history of his tax payments is maintained in the card. At the end of the year, he connects to the online host via a terminal and he gets a tax clearance certificate without visiting any tax office.
The card can be re-issued if lost, provided the required security cards are present.
Card personalization and issuance is governed centrally and possible using security cards only leaving no scope for forged reproduction.
Any document can be instantaneously invalidated by either blocking the smart card itself, or sending a message to all checking terminals.
Handheld devices are installed at various government offices and service associates where smart card, working as tax instrument, can be validated, read, updated, and details printed based on the rights given to the terminal installed.
Benefits
- Increased revenue for government due to removal of fraudulent transactions and fake tax clearance certificates.
- Paying of tax and its collection has become substantially easily
- There can be no doubt on the genuineness of smart card presented as tax clearance certificate, if it is successfully read at handheld terminals, secured by security cards.
- Summarized tax payment details along with clearance certificates can be read or printed from the card anywhere using handheld devices installed at various government offices and associated service / authentication outlets.
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Analyzing tax payment patterns and forecasting revenues has become very flexible and effective.
Equipping authentication centers with terminals that work as authentication device is cost-effective way.
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The whole solution is offline solution avoiding all heavy communication costs involved in any server based online authentication and information fetching system design.
- It's easy to carry and maintain one single plastic sized smart card as compared to a tax file of 100s of pages.
Technologies used
Card Operating System: TimeCOS Card Operating System.
Terminal: Schlumberger Magic Series Terminals.
IDE: Visual c++ for host implementation.
RDBMS: MS-SQL Server.
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