In a landmark reform in the Indian taxation system, Prime Minister Narendra Modi on Thursday, 13th August, launched a platform called “TRANSPARENT TAXATION – HONOURING THE HONEST”, to empower the tax payers to provide a transparent system and to honour the honest tax payer. This is the latest in a series of measures finance ministry has taken to eventually get rid income tax department off its legacy — from intrusive tax collector to tax facilitator.
The platform brings in a transparent, efficient and accountable tax administration. It uses technology, Data Analytics and Artificial Intelligence to administrate taxation.
This platform will add strength to the government’s efforts of reforming and simplifying the tax system. This platform can be broadly divided into:
- Faceless assessment– The approach for selecting cases and tax officers will be based on Artificial Intelligence which will go till the end-to-end finalization of an assessment order without any personal interaction.
- Faceless appeal– A move to reduce cases of tax harassment. Here the selection will be based on data analytics and Artificial Intelligence without any personal relation. All the documents of the assessee will be scrutinized electronically by the officials in case of default, reducing powers of the authorities to arrest and freeze of accounts.
- Taxpayers charter– promises to maintain the privacy and confidentiality of income taxpayers and to reduce the cost of compliance with tax laws.
Faceless assessment and taxpayer charter has been started from Thursday 13th, whereas faceless appeal will begin from September 25th.
Now let’s understand some important Features of the platform
- Selection only through system using data analytics and Artificial Intelligence;
- Dynamic jurisdiction- abolition of territorial jurisdiction;
- Automated random allocation of cases;
- Central issuance of notices with Document Identification Number (DIN);
- No physical interface, no need to visit income tax office;
- Team based assessment and team based review;
- Draft assessment order in one city, review in another city and finalization in third city;
- Objective, fair and just order;
- 2/3rd of the man power is utilized for faceless and balance for other functions.
The major elements of the new “Transparent Taxation – Honouring the Honest” platform include:
- Document Identification Number (DIN). To unfold more transparency in official communication, Document Identification Number (DIN) was introduced some time back to ensure that every communication of the department would carry a computer generated unique document identification number. Without the DIN, a document emanating from the IT department shall be invalid. It therefore provides traceability and authenticity.
- Pre-filled Forms. Prefilled forms are also been provided to the tax payers so that the high value financial transactions are recorded somewhere and it enables the tax payer to see those information visible, upfront even he wants to comply by paying the taxes. The department will handhold the taxpayers to use the prefilled forms effectively.
- Direct Tax Vivad se Vishwas Act, 2020. The department has introduced this act with a view to provide for resolution of pending tax disputes under which declarations for settling disputes are being filed currently.
- Monetary Threshold of Appellate Courts. To effectively reduce taxpayer grievances / litigation, the monetary thresholds for filing of departmental appeals in various appellate Courts have been raised. and
- Go digital. Digital transactions and electronic modes of payment too have been encouraged to cut down red-tapism.
There are some notable advantages of this platform, let’s understand it.
- A transparent, efficient and accountable tax administration is what this platform brings in.
- It eases compliance burden, it brings in fair, objective and adjust system.
- The new system will significantly eradicate corruption, harassment of the taxpayers, and reducing litigation by introducing faceless transactions.
- Policy-driven governance minimises grey areas, cutting discretion
- These steps may significantly improve the direct tax to GDP ratio in going forward after reforms are fully implemented
- The initiative also assumes significance since the amount locked up in tax litigation across appellate tribunals and various courts in the country has been over US $60 billion and can be unlocked and put to better productive purpose.
After having made its tax rates attractive across the universe, this simplified compliance move would also instil the much need confidence among global investors as India is on the cusp of attracting substantial foreign direct investment in the post-COVID-19 era.
When the life of an honest taxpayer becomes easy then the country also develops. Only a few countries in the world respect taxpayers, India has become one of them.
Dileep K Nair
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