Prime Minister Modi has unveiled a gigantic reform, rescuing the entire nation from the menace called tax terrorism. Through video conferencing, the Prime Minister launched the “Transparent Taxation – Honouring the Honest”. Three big reforms constitute this platform- Faceless Assessment, Faceless Appeals and Taxpayers’ charter. Faceless Assessment and Taxpayers’ Charter have come into immediate effect.
इस प्लेटफॉर्म में Faceless Assessment, Faceless Appeal और Taxpayers Charter जैसे बड़े रिफॉर्म्स हैं।
— PMO India (@PMOIndia) August 13, 2020
The object of these reforms is to reduce complexities, ease compliance and ensure minimum physical contact and interference in Income tax payments. PM Modi is honouring honest taxpayers in line with his agenda to do away with tax terrorism. The Prime Minister said that the focus is on making taxation public-friendly, “banking the unbanked, securing the unsecured, funding the unfunded and honouring the honest.”
This solves the biggest issue of the Indian taxation system, viz. harassment of honest taxpayers by overzealous officials. Under the new system, however, the physical role of the tax official is being eliminated. This is being made possible through automated, randomised selection of taxpayers.
Taxpayers will be selected through data analytics and Artificial Intelligence. Moreover, the concept of territorial jurisdiction has been replaced with dynamic jurisdiction. Therefore, your source of income might be located in Delhi and you could be getting assessed in say Kanyakumari. There is total removal of human control on the selection of taxpayers and assessment officers to minimise the risks of harassment in the entire process. Tax terrorism is being eliminated brutally.
Other measures include centralised issuance of notices with Document Identification Numbers (DIN), team-based assessments and team-based reviews, which will also be possible because of drastic reduction in manpower requirements under the Faceless regime. In order to ensure fairness, draft assessment order will be made in one city, reviewed in another and finalised in a third city.
Prime Minister Modi wants taxpayers to feel free, fearless and empowered through such facelessness. He said, “The tax system is becoming faceless. Tax payer will get the feeling of fairness and fearlessness.”
Faceless Assessment is now compulsory, and the exceptions to have been carved out.
This is the second aspect of the Faceless taxation mechanism. Once, the Appellate jurisdiction also goes faceless, the entire Indian taxation system will be freed of human control and bias. Again, Appeals will be allocated to any office in the country through randomised selection. No office will have blanket jurisdiction on any territory.
Again, the decisions at the Appellate level will be team-based and reviewed. The identity of the officers will also remain unknown to ensure integrity at the levels of both the taxpayer and the Appellate officer.
PM Modi seems to understand that the Assessment is not the only issue in our taxation system, rather the Appellate system also needs to be streamlined with a tax-friendly system.
Taxpayers’ charter and Widening the tax base:
According to a Press Release by the Prime Minister’s Office, PM Modi said, “It can also not be denied that only 1.5 Crore people pay the taxes in a country of 130 crores.” According the PMO, the Prime Minister “urged people to introspect themselves and come forward to pay the taxes due.”
In fact, the Taxpayers’ Charter which has been meticulously drafted and empowers taxpayers with rights like representation, fair and just system, confidentiality, etc., also casts certain duties upon taxpayers which include honesty, compliance, upkeep of accurate records and timely payment.
Prime Minister Modi rightly believes that a simplified system will ultimately pave the way for greater compliance. He said, “Compliance is also difficult where there is complexity. At least where the law is clear, both the taxpayer and the nation remain satisfied.”
जहां Complexity होती है, वहां Compliance भी मुश्किल होता है।
कम से कम कानून हो, जो कानून हो वो बहुत स्पष्ट हो तो टैक्सपेयर भी खुश रहता है और देश भी।
बीते कुछ समय से यही काम किया जा रहा है।
— PMO India (@PMOIndia) August 13, 2020
Prime Minister Modi is thus aiming big on a fair, transparent and friendly tax system. This will prove to be a huge windfall as far as the investor sentiment and perception of the Indian taxation system are concerned. In his own words, PM Modi is creating a painless, seamless and faceless taxation system.