The recent tax reforms like the “faceless assessment scheme’’ will make IT filing process more objective and transparent

The recent tax reforms announced by our government under the visionary Prime Minister Shri Narendra Modi is a step that will help in making the IT filing process more transparent and objective. Income-Tax as a direct tax is a key measure and resource for the government for the country’s progress and development. However, historically, it has got entangled in various issues like non-compliance by the tax payer and arbitrariness by the adjudicator.

The current government’s resolve to bring transparency and accountability in public life and serve the ordinary citizens in a more respectful and professional manner is something to be lauded. Both businesses and individuals who are Income-Tax payers contribute to nation building and deserve a sense of recognition and respect.

Income tax is one of the largest income components for the government. The money we pay as taxes is spent on various development activities like civil operations (infrastructure, judiciary), welfare schemes and expenditure related to healthcare, defence and education (refer infographic).

Source: www.deccanherald.coms

Fundamental Reforms to simplify India’s taxation system

The Central Government has introduced multiple reforms over the last six years to make the taxation system seamless, painless and faceless. Some of the significant reforms include a reduction in the corporate tax rate and the abolition of dividend tax. Further, the government has been focusing on direct tax simplification and enhancing transparency in communication. Additionally, by introducing prefiling of income tax returns, the IT department has made compliances more convenient and easier for individual taxpayers. Compliance norms for startups have also been simplified.

In continuation of these reforms, last month, Prime Minister Narendra Modi announced the launch of a new platform to ease the compliance burden for assessees and reward the "honest taxpayer". The platform, 'Transparent Taxation - Honouring the Honest'' platform in a big push for tax reforms. As the name suggests, the platform is aimed to honour India’s taxpayers who have been sincere with taxes. At the time of introducing the forum, PM Modi said that the taxpayer is now assured of fair, courteous, and rational behaviour.

Decoding the Transparent Taxation Platform

The Transparent Taxation platform marks the introduction of Faceless Assessment, Faceless Appeal and Taxpayers Charter. Together, the three features envisage to provide fair and reasonable treatment to taxpayers and respect their honesty through increased fairness and greater objectivity in the tax system.

Features of the Faceless Assessment scheme:

• Selection of a taxpayer through a system based on data analytics and artificial intelligence (AI)
• Abolition of territorial jurisdiction (this means a taxpayer may belong to one city and the ITR may be assessed in some other town through random selection by computer)
• Automated and random allocation of cases
• Central issuance of notices with Document Identification Number (DNI)

Features of the Faceless Appeal system:

• No physical interface and no need to visit the Income Tax Office
• Team-based assessments and team-based review
• Draft assessment order in one city, review in another town and finalization in a third location.

(The system will begin from 25th September 2020)

Features of the Taxpayers Charter:

• The charter lists the Income Tax Departments' duties to taxpayers
• It highlights the taxpayers' responsibilities
• It sets up a mechanism for appeal and review reduces cost compliance and enables timely decision-making

What do these reforms mean for the taxpayers?

The Transparent Taxation reforms will significantly reduce the scope for ambiguity and overreach. The charter would ensure a free, fair and transparent tax environment. Speedy completion of cases will be another hallmark of the reforms.

On their part, citizens who are eligible taxpayers should come forward to pay their taxes on time. Tax payment is our contribution to nation-building. Let us do it promptly and honestly.

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