Faceless assessment schemeApprox Read Time: 4 minutes
- The Prime Minister has expanded the faceless assessment scheme to all taxpayers, unveiled a single-page Taxpayers’ Charter and promised a faceless appeal mechanism from next month.
- While launching the ‘Transparent Taxation — Honouring the Honest’ platform which promises ‘faceless’ assessments and appeals, the Prime Minister (PM) addressed the taxpayers.
- He noted that the attempt by the government is to make the tax system, seamless, painless and faceless.
- He said that technology and simple rules will make the system painless.
- It will be faceless in a way that the taxpayer and the tax officer should not be bothered and there will be no direct contact between the taxpayer and the income tax officer in all matters of scrutiny, notice, survey or assessment.
- The PM urged citizens to be more tax-compliant, pointing to the fact there are just 1.5 crore taxpayers in a country with a population of 130 crore.
Some taxpayer stats:
- The number of people filing income tax returns has increased by about 2.5 crore in the last 6-7 years.
- However, only 1.5 crore people pay taxes in a country of 130 crore.
- To reduce harassment of tax payers, as per the Government, the scrutiny of cases by the income tax department has reduced in the last six years, from 0.94 per cent in 2012-13 to 0.26 per cent in 2018-19.
Random Allocation of Tax Scrutiny
- Till now the tax department in one’s city handled all issues like scrutiny, notice, survey or confiscation. From now on, the scrutiny cases will be allotted randomly in any part of the country.
- The advantage is that under this system, a taxpayer will not have an opportunity to know people in the tax department or exert any influence.
Scope of Faceless Assessment Expanded
- The Central Board of Direct Taxes (CBDT) expanded the scope of the faceless assessment which was launched last year and asked its officers to pass all assessment orders via the National e-Assessment Centre.
- This scheme was adopted for 58,000 cases last year.
Unit Assessing Tax Returns Can’t Conduct Any Surveys
- From now on, the unit that undertakes assessment of tax returns has also been barred from conducting surveys.
- This task will now be handled by the investigation and TDS wings of the department.
- The government also launched a taxpayers’ charter which states that the I-T Department is committed to treat taxpayers as honest unless there is reason to believe otherwise.
- The Charter is a significant step to assure “fair, courteous and rational” behaviour by the department, calls for a fair and impartial appeal and review mechanism, while respecting the taxpayers’ privacy and confidentiality.
- Taxpayers are expected to be honest and compliant, keep accurate records, respond and pay on time, and be aware of the information and submissions made by their authorised representative as per the Charter.
Plans by the IT Department:
- The measures announced by the PM along with some others aim at widening the tax base, ensuring better compliance and transparency.
- These are proposed measures and not yet in force.
- Measures to Widen the Tax Base
- The Income-Tax department plans to expand the list of reportable financial transactions to include hotel payments over Rs 20,000, life insurance premium payment over Rs 50,000 and health insurance premium payment over Rs 20,000 with the objective of widening the tax base.
- More Transactional Categories in SFT
- Besides these, donations and payment of school/ college fees over Rs 1 lakh a year, foreign travel, domestic business class air travel, purchase of white goods, jewellery and paintings over Rs 1 lakh, demat accounts and even bank lockers are proposed to be included in the list of the Statement of Financial Transactions (SFT).
- More transactional categories in the SFT imply an enhanced flow of information to tax authorities, but will put the onus on taxpayers to comply voluntarily.
- When implemented, it will also be reflected in Form 26AS, the consolidated annual statement showing tax deductions/ collections and advance tax against an individual’s PAN.