For those who felt that the process of tax filing is either complex or in some ways oppressive because of the fear of making mistakes and getting caught, there is now a solution on hand.
Prime Minister Narendra Modi has stepped in to facilitate honest tax payers with the new ‘Transparent Taxation — Honoring The Honest’ platform. The idea is to make the tax system seamless, painless, and paperless. Expanding the process of tax reforms, the government platform will involve a system of faceless assessment and a taxpayer charter.
Along with the new platform, Modi also announced a ‘Taxpayers’ Charter’ that enshrines in law the rights and duties of the taxpayers in order to improve taxpayer services while also holding the Income Tax Department accountable for its actions.
According to Hemant Vastani, an author and a Chartered Accountant with three decades of experience in the industry, the new platform would ease compliance and expedite refunds, benefiting honest taxpayers.
“Transparent Taxation platform, as its name suggests, aims to remove any physical interface between the taxpayer and the income tax department. Three main features of the platform are faceless assessment, faceless appeal and taxpayers' charter with a aim to have people-centric and public friendly initiative where the focus is on minimum-government-maximum-governance,” he said.
While the faceless assessment and taxpayers charter came into force from August 13, the faceless appeal service will be available from September 25.
With the faceless income tax assessment, the scope for corruption and overreach by officials would be reduced and the age-old practice of territorial jurisdiction would be done away with, Vastani said.
“Moreover, the taxpayers can reply to notices electronically. It will eliminate the need for taxpayers to visit the income tax office personally. The assessment order will be drafted in one city, reviewed in another and finalised in the third city. Faceless appeals will have a random allotment of cases without the need for personal visits by taxpayers. The cases shall be selected using data analytics and artificial intelligence,” he explained.
Meanwhile, the new taxpayers’ charter emphasises the government’s responsibility to treat every taxpayer as honest unless there is a reason to believe otherwise. It also asks the I-T Department to respect the privacy of the taxpayer and be no more intrusive than necessary in any inquiry, examination or enforcement action. In return, it added that the taxpayer would be expected to keep account records, honestly disclose full information and fulfil their compliance obligations. It added that taxpayers would be expected to know what information and submissions are made by their authorised representatives to the tax department.
“The platform looks promising to increase the efficiency of the tax department and reduce the hardship of the taxpayers. But before being implemented across pan India, the faceless system must be tried and tested as not all taxpayers may be accustomed to the digital mode of communication,” Vastani opined.
In a country of 130 crore citizens, if less than four per cent population files returns and only 3,16,000 individual tax payers disclose income above Rs 50 lakh, this move, if implemented in the same spirit as it is designed, will assist in increasing the tax base, says Deepa Rathi, Joint Managing Partner, R Kabra & Co.
“What is important is that the message goes to people that tax evasion is not the way of life, but tax planning and taking benefits of tax exemptions is the norm for future while paying right amount of taxes. With GST, digitisation and integration of all asset data, we hope lot of queries from tax department will get generated and to handle the same, one has to plan all transactions properly,” Rathi said.
A major concern, when it comes to paying taxes and filing of tax returns, is the lack the understanding of the law among the common man as well as small businesses, or even mid-sized businesses. Rathi feels that in such cases, where the possibility of potential errors may be high, a faceless system should not become such a complicated mechanism that it pushes small entrepreneurs in unnecessary litigation. “Government will have to setup mechanism of grievance redressal in some form,” she adds.
While launching the new platform, the Prime Minister had appealed to individuals and businesses who are not paying their taxes to voluntarily come forward and become part of the tax base to help build a self-reliant nation.