The prime minister of India announced a new system to make taxation in India much more transparent. The prime minister, Narendra Modi, launched “transparent taxation: honoring the honest” to take forward the initiative of reforming the methods of direct tax in India.
The platform is aimed at easing the burden for assessment and would reward the “honest taxpayers.” Transparency will be brought in the official communication by the introduction of Document Identification Number (DIN).
The Prime Minister said, “The country’s honest taxpayer plays a big role in nation-building… A faceless tax system will give the taxpayer confidence in fairness and fearlessness.”
He also said that the ongoing reform would take taxation into new heights and also added that this platform will “have faceless assessments, faceless appeal and taxpayer charter.”
By this, the taxpayers would not have to visit any office or meet any official, and the charter will be implemented on and from August 13th. The faceless appeal would come into force from the 25th of September, which is also the birth anniversary of Deen Dayal Upadhaya. The prime minister also said that this new facility will strengthen the efforts of “reforming and simplifying” the country’s tax system.
The Prime Minister also said that introducing this reformed system is a new milestone in the structural reforms initiated by the government. The government is trying to make tax paying “seamless, painless and faceless”, he added. The “faceless” part of the new reform will help both the taxpayers and the officers. After the introduction of the system neither would it matter who is paying nor who is the officer collecting the tax.
By eliminating frequent and personal interaction, the government will be able to reduce malfeasance. The scheme will also provide an audit trail, which from now on will be unbiased and fully transparent. Providing the National e-assessment Centre (NEC) will give the taxpayer enough time to provide information, instead of hurrying after a last-minute call and demands for information.
What key features will this new system have:
- Selection of taxpayers via data analytics and Artificial Intelligence.
- There won’t be any jurisdiction while you pay tax. A person in Mumbai might be allocated to an officer outside the city or even the state. This would be a random selection by the computer.
- Cases will be allocated randomly
- There would be no need to visit the taxpayer in his office. The experience would be much easier and seamless.
- There would be three stages, the draft assessment order will be in one city, review in another city, and final assessment in the third and final city.
What will this reform helps to reduce:
- Frauds
- Major tax evasion
- Sensitive and search matters
- This reform would also exclude international taxation and the Black Money Act.
What is the taxpayer’s charter and how will it benefit?
Announced by Nirmala Sitharaman, the Finance Minister, during the Union Budget 2020, Prime Minister Narendra Modi made a public announcement of the taxpayers charter. This brings India among the few countries like France, USA to have a taxpayers charter.
Key elements of the charter are:
- Taxpayers are to be seen as honest individuals unless there is evidence to prove otherwise.
- Gives taxpayers a fair chance to review an appeal against the decisions made by the officials of the Income Tax Department.
- Taxpayers can now maintain privacy and confidentiality.
- Also, this gives taxpayers their fair power to lodge complaints against officials and ensures fast resolutions of their complaints.
This also comes with some responsibility from the taxpayers’ side. These are:
- They have to be honest and disclose full information.
- The records from the taxpayer’s side must be well documented and maintained.
- They also need to quickly respond upon any query from the officials.
- Get on the same page with the rules and their modifications.
- Pay taxes timely and regularly.
Comments from the Government:
“Taxpayers will now be given the respect they deserve. The taxpayer will now be trusted, not looked at with doubt. The tax department will have to carry out the steps and processes in a time-bound manner,” Narendra Modi added while unveiling the new system.
The Finance Minister if India, Nirmala Sitharaman, had announced the charter during the Union Budget for the fiscal year 2020-21. This reform would also benefit the taxpayers by ensuring timely services from the Income Tax Department.
A tweet from the Finance Minister said: “With electronic replies, zero physical interface of authorities & instant solutions your way, this is the newest, most convenient & easiest way to tackle your IT litigation issues.”
The Prime Minister also said that people of the country should pay their taxes voluntarily. In a statement, he said, “In the last 6 to 7 years, the number of people filing income tax returns has increased. But it cannot be denied that only 1.5 crore people pay taxes in a country of 130 crores. I hope and urge people who do not fall under any tax net now to come forward by themselves in this regard (to pay tax).”
During the reign of the current government, many steps have been taken to reform the country’s tax structure. The government had already reduced the corporate tax to 22 percent from 30 percent for new manufacturing units and scratched out the dividend distribution tax in recent times. The Income Tax Department has also worked hard to make life easier for taxpayers. They had simplified the income tax return filing process, lowered taxes for the common man. Also, the department launched a scheme named “Vivad Se Vishwas” to speed up the process of pending tax disputes.