Infosys: Inside Infosys’s income-tax portal mess: vain ambition, flawed DevOps, and hubris of one-day refunds – The Economic Times

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SynopsisWhen an inherently complex digital project is disrupted by the pandemic, but the client won’t defer deadlines, it can only lead to a shambles, a product riddled with bugs, and a host of questions nobody wants to answer. For now, the country has to resign itself to another level of annoyance while paying taxes.

Embark on an overly ambitious technology project, but try building it with an old-fashioned system-development approach. Then a pandemic strikes out of nowhere. Execution is delayed, but the client refuses to postpone deployment. What next?

It all ends up in a platform that keeps churning glitches. In other words, that’s India’s new income-tax portal for you.

The over INR4,000 crore platform, built by Infosys, has been constantly in the news since it launched in June. And never for good reasons. Despite Infosys’s attempts to fix the glitches, they continue to crop up. The finance ministry has summoned Infosys’s management twice publicly and several other undisclosed meetings have happened. Deadlines to fix glitches have been issued. Deadlines to fix the glitches have been missed. The next one is September 15. Most expect that the system will not function perfectly even after that and the end-of-the-month deadline for income-tax filing could see more extensions, just as Infosys would get to fix the bugs.

ET Prime chronicled the issues the system faced in June. But now the recurring problems are leading to a host of questions. While Infosys did not respond to a request seeking comments, the key question that has emerged is whether such a complicated system was needed in the first place? Why was the new platform launched at one shot instead of module-wise staggered releases? What is the likely course the project will take? Will the country simply have to resign itself to another level of annoyance while paying taxes?

Faceless aspirations
By 2019, the government realised that efforts to simplify tax assessments and make them system-driven, or “faceless”, as it is popularly called, were yielding results. The process was particularly a hit with salaried taxpayers, as claims and refunds were resolved over e-mails and a few clicks. The intent to pursue faceless assessment gathered momentum.

Budget 2020 rolled out many ambitious initiatives such as pre-filled income-tax return (ITR) and automatic information gathering from various sources. The initial target set for this was by April 2020. As the pandemic broke out and lockdowns followed, the government decided to hold back as it did not want to burden taxpayers with changes.

“Come 2021, when the situation started to look up, and faceless appeals and assessments were also made mandatory in almost all cases, the technological changes became necessary. The new portal had to be rolled out,” says Ameet Patel, past president, Bombay Chartered Accountants’ Society and partner, Manohar Chowdhry & Associates, Chartered Accountants.

But what was the idea behind the June 7 roll-out?

ET Prime has previously reported the whys that prompted a hurried roll-out. The test phase was cut short as Infosys ran out of time. Even though the IT company asked the government to hold back deployment, the finance ministry insisted that the project be launched on June 7. Three months since, usability issues remain unresolved.

“We are still unable to log onto the site or able to check basic information like past records with 100% accuracy. Even the tab for the Viwad Se Vishwas scheme is not easily accessible,” says Patel. However, he accepts that when a certain issue is escalated, the authorities try to solve it. But this bits-and-pieces approach isn’t helping. “Probably because they are working on one part, many other features on the site are not accessible on some occasions,” Patel adds.

Users of the portal have now come to a stage where they hold little hope that the system will get better any time soon. That brings us to the moot question: Did the government and Infosys miscalculate this tough exercise?

Mission 63-to-1
The intent behind this exercise as mentioned earlier is to reduce human interface in the system and make it process-driven as much as possible.

When the income-tax project was up for rebid, speeding up refunds was an important ask.

In its earlier edition, the income-tax project was split into two parts. Tata Consultancy Services handled the filing part and Infosys handled the back-end central processing centre. As the process was handled by two vendors, tax refunds were not instantaneous. When the government decided that the average time for refunds be reduced from 63 days to 1 day, it became essential for the two parts to be merged.

No other country offers such fast refunds, though. The US Internal Revenue Service does it in two to three weeks if the taxpayer files digitally and requests a bank deposit for the refund. The UK tax authority takes about two months.

How long tax refunds take elsewhere @2x

“The exercise of shrinking the refunds process from 63 days to one day is overambitious. When we have such unrealistic expectations, the system is bound to crash, and that’s what happened,” says R Bupathy, former president of The Institute of Chartered Accountants of India, and partner, of accounting firm R Bupathy & Co.

Who can use the new ITR-@2x

As a test case, only very few tax filers can use the new IT return form (see graphic). But even in some of these cases, with access to Form 26AS not possible under the current circumstances, will furnishing details be a simple process? More importantly, are there adequate checks to ensure that details filled in are correct, so that refunds can be processed in a day? In short, can a complicated back-end coordinate with the buggy front-end to do the job? For a one-day refund, this has to happen almost instantaneously. Therefore, the complexities involved are vastly numerous.

Take the government’s 189-point checklist which lays out the snags the system can encounter in validating the income-tax form. It also outlines how these problems can be solved. If a certain defect or error message pops up, the tax filing cannot be completed. The process has to start all over again. In the earlier system, not every point had to match at the time of filing the tax return. It gave room for further assessments because there was a separate processing segment to handle variations. Given the complexities involved in understanding the checklist, the objective to encourage taxpayers to adopt a do-it-yourself approach and reduce human intervention is defeated. Questions arise as to whether the system has indeed become simpler or more complicated.

“The checkpoints here are so robust that if someone has to claim an incentive, it’s punitive. Likewise, even claiming deductions under Chapter VI-A is daunting,” says Bupathy. As if to echo his viewpoint, Twitter continues to reverberate with the cries of harried chartered accountants clamouring for a return to the old system. But that’s unlikely to happen.

“We have been categorically informed that the old portal has been scrapped and cannot be revived. It appears that all data got migrated from the old portal to the new portal and reviving the old portal would mean remigrating or shifting back data to the old portal,” says Patel.

This presents a daunting problem. Take the case of Form 26AS. Information from multiple sources such as mutual funds, banks, and depositories is fed into the form. Now, all that has to be incorporated into the new form. If there was any loss of data in the initial migration from the old portal to new, remigrating would imply that the loss of data would become glaringly visible. The government cannot afford to reveal such lapses.

Project in turmoil
At Infosys, the income-tax project was meant to be a shining example of what the company could achieve. Unlike the project on goods and services tax, which also went through a slew of issues, income-tax rules were not going to change frequently. Having handled part of the project earlier, Infosys was slightly more confident about achieving the goals.

“When we have unrealistic expectations, the system is bound to crash, and that’s what happened.”

— R Bupathy, former president, The Institute of Chartered Accountants of India, and partner, R Bupathy & CoThe old filing system, run by Tata Consultancy Services, was kept available for 18 months, while Infosys engineers worked on the code. But because of the one-day refund plan, the company had to design a new version. While ministry officials signed off on the design, the main issues emerged at the development stage. Because of the pandemic, face-to-face meetings, which were essential, could not be held, thereby slowing down the work.

There is another problem. The government wanted the company to create a system in which different types of returns — salaried; small and medium businesses; and large corporate — should be processed differently. But a person aware of the developments says, “At this juncture, we understand that such silos have not been created. Processing of requests will continue to happen as a cluster.”

Compartmentalising the back-end processing is important to reduce the output time and, hence, was considered important in this case. But given the limited time available, that couldn’t be done. Infosys launched the reworked back-end of the systems in November 2020, says a company executive.

Infosys also faced an issue with payments. Most large projects, especially those where a platform is being built, have the development costs front-loaded because it requires more people to design and build a project than it does to run and maintain it. Infosys says it has over 750 people working on this project. So far, the company has been paid less than INR200 crore out of the over INR4,000 crore contract.

On the one hand, that could be justified on the reasoning that payment for government projects must follow only upon delivery. But such terms of payment are also why most IT companies struggle to work on government contracts and stay away from such business.

Transformational projects need top talent, an increasingly finite and expensive resource for IT companies. They find it hard to justify deploying expensive resources on a project for which payment won’t come for years. They would rather take up contracts that pay every month, and in foreign currency.

A shuffle at the top
Infosys is reworking the leadership in the team handling the project. Raghupathi Cavale, long-time Infosys India head, is returning to the fore to handle the issues, even though he is due to retire later this year. Cavale was present with CEO Salil Parekh in the meeting with Finance Minister Nirmala Sitharaman.

The programme’s management, including the director of the project, have been hauled up. The company has also brought in more leadership into the project and more engineers to staff it. But there may be more turnover in the team’s leadership, an Infosys executive says.

“There have to be changes. Clearly, it is not going well and there is a reputational issue here as well,” says the Infosys executive with knowledge of the matter.

Part of the problem for Infosys is that it is taking all the blame and is struggling to defend itself. And the accusations are reaching unprecedented levels. Last week, the mouthpiece of the Rashtriya Swayamsevak Sangh, Panchjanya, accused the company of acting at the behest of “anti-national forces” to “destabilise the Indian economy”.

“We are the only ones getting hit, but there is a lot of responsibility for this mess to go around. We didn’t even get technology from our OEMs on time in some cases due to the pandemic delays,” the Infosys executive adds.

Flawed project design
IT experts also point to a fundamental flaw — that the project did not use the best development methodology. It was designed in the “waterfall” method, in which each step followed the next — design, development, testing, and deployment. In this method, the end-result emerges only at the last step. In this case, from the time Infosys won the project in 2019 to June 7, 2021, if anything could go wrong, it did.

Most IT companies have moved away from the waterfall method, especially for digital projects such as the income-tax system upgrade. Even Infosys offers enterprise agile DevOps as a service to its clients. In the agile method, each change is made in two-to-four-week intervals, called sprints, and each change builds on the previous one. So, issues can be detected and resolved at multiple steps in the process of development. But this model requires constant contact and interaction with the client.

“This project is a poster child for why you shouldn’t plan big, complex projects in this manner. But it would have been hard for Infosys to manage this [an agile approach] with the Indian government as a client. There has to be a maturity at the client-level as well for this to work,” says an IT executive with a large Indian IT-services company.

For example, projects delivered in an agile manner tend not to be fixed price (a contract bid, in this case) because the design and demands can change based on the results of each sprint. If something needs to be added to the platform that wasn’t in the initial specifications, then a new work order is made, which can increase the end-price. But what the agile method does is reduce the risk of spending a lot of money on a technology system that is not efficient enough.

“You cannot do agile development with an L1 bidding method. And so, thanks to this bidding model, we (India) will continue to have ambitious technology projects that struggle because we are still contracting for the old world,” adds the executive.

(Graphics by Mohammad Arshad)

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