New Delhi, Jan 16 (IANS): The Cabinet on Wednesday approved Rs 4,241.97 crore to set up an integrated e-filing and processing centre which aims to cut down the processing time for income tax returns from 63 days to one day.

"The Cabinet has given its approval to expenditure sanction of Rs 4,241.97 crore for Integrated e-filing and Centralised Processing Centre 2.0 Project of the Income Tax Department," Union Minister Piyush Goyal told reporters.

The Cabinet also approved the expenditure sanction for the consolidated cost of Rs 1,482.44 crore of the existing CPC-ITR 1.0 project up to FY 2018-19.

"After the completion of this project, turnaround time for processing I-T returns will drastically come down from the current average of 63 days to one day. Refunds will also become much faster," he said without predicting the exact time for refunds.

With faster and accurate outcomes for taxpayers, it will also reduce the need for rectification from the current average of 2 per cent to 0.1 per cent, a decline of 95 per cent, the Minister said.

Software major Infosys, which emerged as the lowest bidder, has been engaged by the government to integrate the e-filing portal and the CPC within the next 18 months with three additional months for testing, according to Goyal.

This approval has significant benefits for the department and taxpayers through various functionalities such as pre-filling of ITR, integrated contact centers for taxpayer assistance and tax payer outreach programme through digital media.

The decision will ensure horizontal equity and fairness by processing returns filed by all categories of taxpayers across the country in a consistent, uniform, rule-driven and identity-blind manner, the Finance Ministry said in a statement.

It said the decision will ensure transparency and accountability by faster processing of returns and issue of refunds to the taxpayer's bank account directly, by adhering to international best practices and by providing processing status updates and speedy communication using mobile app, email, SMS and on the department's website.

"The proposal ensures continuation of the department's goal towards business transformation through technology," the Ministry said.

The e-filing and CPC projects have enabled end-to-end automation of all processes within the department using various innovative methods to provide taxpayer services and to promote voluntary compliance, it said.