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One of the problems in low-cost passive RFID tags is that they do not provide authentication and privacy. To address this problem Liu et al. proposed the PAP protocol for low-cost passive RFID tag in ICCST 2009. The PAP is has low computation and ensures privacy and authentication between tags and readers, especially designed for SCM (Supply Chain Management) and small shops. We present an IPAP: Improved Privacy and Authentication Protocol. IPAP has 2-bits privacy bit to support refined privacy protection and lower computation overhead compared with the original PAP.