The Indian Prime Minister Mr. Narendra Modi has rolled out a scheme to incentivize honest taxpayers on 13.08.2020 via video conference, entitled “Transparent Taxation – Honoring the Honest”. Recently, several initiatives have been taken by the Central Board of Direct Taxes (CBDT) for bringing in efficiency and transparency in the functioning of the income tax department. Few to name would be:
- Reduction in corporate tax rates from 30 percent to 22 percent and for new manufacturing units the rates were reduced to 15 percent.
- Dividend Distribution Tax (DDT) abolished.
- Document Identification Number (DIN) mandatory on all official communication from department.
- Prefilling of income tax return for individual taxpayers.
- Simplification of compliance norms for startups.
- Introduction of “Vivad se Vishwas Act, 2020” scheme for settling direct tax litigation issues.
- Rise in monetary thresholds for filing of departmental appeals in various appellate courts.
- Extension in statutory timeliness for filing returns for easing compliances for taxpayers during the COVID times.
- Expeditious release of refunds.
- Simplification of direct tax laws.
- Faceless E-assessment scheme.
- Introduction of new tax regime.
PM further stated that in the past 6 years, India has witnessed the evolution of a new governance model in tax administration. We have decreased - complexity, taxes, litigation, and increased - transparency, tax compliance, and trust on the taxpayer. Our effort is that our tax system should be seamless, painless, faceless. This is yet another step towards our resolve to provide “minimum government, maximum governance”.
The scheme will further carry forward the journey of direct tax reforms. It can be categorized in following major headings:
- Faceless assessment & appeals: Any assessment other than faceless assessment will be invalid. Also, appeals will be randomly allotted to any office across the country and the identity of deciding officer shall be kept confidential.
- Taxpayer’s Charter: It lays down the commitment of government towards taxpayers and obligations of the taxpayers.
Faceless assessment & Taxpayer’s charter are effective immediately whereas facility of faceless appeals will be available for citizens across the country from 25th September 2020.
- Faceless assessment and appeals:
The objective of this reform is to impart greater efficiency, transparency, and accountability there by eliminating physical interface between the taxpayer and tax officers. The salient features are enlisted here under:
- Selection only through system using data analytics and Al.
- Dynamic Jurisdiction - abolition of territorial jurisdiction.
- Automated random allocation of cases.
- Central issuance of notices with Document Identification No. (DIN).
- No physical interface.
- No need to visit income tax office.
- Team-based assessments and Team-based review,
- Draft assessment order in one city, review in another city and finalisation in third city.
- Objective, fair and just order
- 2/3rd of the manpower be utilised for faceless and balance for other functions
2. Taxpayer’s Charter:
The Charter enlists the expectations of the government from taxpayers and vice versa. The aim of the Charter is that of nurturing the relationship between the Revenue departments and the community that they serve, a relationship of mutual trust and respect. It lays down 14 rights and 6 obligations for taxpayers which are presented here under:
|Right to be treated with fairness and impartiality||Obligation to be honest|
|Right to be treated as honest and tax-compliant||Obligation to be compliant and cooperate when you deal with the Tax Departments|
|Right for certainty||Obligation to keep proper records in accordance with the law|
|Right for assistance and information from the Tax Departments||Obligation to file proper and complete tax documents and effect payments by the statutory due dates|
|Right to pay no more than the correct amount of tax||Obligation to Inform the Tax Departments about changes in circumstances|
|Right not to be subject to retrospective taxation||Obligation to know your tax responsibilities and the consequences for noncompliance|
|Right to minimise compliance costs|
|Right to be advised and represented by any person on taxation matters|
|Right to appeal|
|Right to privacy and confidentiality of information we hold about you|
|Right to know what information we hold about you|
|Right for the licit arrangement of your tax affairs that minimise the tax liability|
|Right to request a payment plan|
|Right to complain about our service|
The introduction of the scheme has unveiled new horizons of transparent tax administration thereby imparting efficiency and accountability, eliminating physical interference between the taxpayer and tax officers using technology, data analytics, AI and empowered and benefited honest taxpayers. The Indian government has marked the launch of the platform a landmark in history of tax administration.
Posted by: Vineet Gupta
Designation: Managing Partner
Organization: AKGVG & Associates
Mobile no: +91-9811118031