PM Modi to unveil friendly measures for honest taxpayers ahead of I-Day

Steps may include a taxpayer charter to empower assessees by outlining their right to get time-bound services and expansion of scope of faceless assessment to prevent harassment

Prime Minister Narendra Modi is likely to unveil new measures to promote tax-friendliness and transparency, during a video conference with officers and taxpayers scheduled for Thursday.  

These measures may include the unveiling of a taxpayer charter to empower assessees by outlining their rights to get time-bound services, and expansion of the scope of faceless assessment to prevent harassment.

Modi will launch the platform for Transparent Taxation — Honoring the Honest two days ahead of Independence Day. 

“The upcoming launch of Transparent Taxation — Honoring the Honest by the PM will carry forward the journey of direct tax reforms,” the finance ministry said in a release on Wednesday.  

The I-T Department had rolled out the faceless e-assessment scheme in October last year, eliminating physical interface between an assessing officer and a taxpayer. 

Of the over 58,000 cases picked up for faceless assessment, 8,700 have been disposed of, with a target for completion by October. Faceless e-assessment has eliminated territorial jurisdiction and substituted individual discretion with team-based assessment, thereby bringing in transparency.

Communication to the taxpayer goes from the National e-Assessment Centre (NeAC) in New Delhi. The NeAC randomly allots cases to different assessment units. These assessment units do not correspond to the taxpayer directly. 

Mumbai, New Delhi, Kolkata, Chennai, Bengaluru, Hyderabad, Ahmedabad, and Pune are covered under the scheme at present.

“The scope of faceless assessment may be expanded to other jurisdictions. The taxpayer charter may also get unveiled.” said a government official.  

The CBDT will adopt a “taxpayer charter”, to create trust between taxpayers and the administration. Giving it in the statute, it will be binding on the tax department. Only a handful of countries have a taxpayer charter in statute — such as the US, Canada, and Australia.

FM Nirmala Sitharaman had, in the Budget, announced the taxpayer charge to reassure people there would be no harassment.

“The whole issue is to provide better services to make taxpayers more compliant. They should the confidence in the administration,” said a senior tax officer.

An important aspect of both ‘ease of living’ and ‘ease of doing business’ is fairness and efficiency of tax administration, Sitharaman had said in her  Budget speech.

The event will be attended by industry bodies, trade associations, chartered accountants’ associations, eminent taxpayers, officers and officials of the I-T Department, FM Nirmala Sitharaman, MoS (Finance) Anurag Thakur, and Finance Secretary A B Pandey.

The I-T department is committed to taking the initiatives forward, and has sought to ease compliance in Covid environment by extending statutory timeliness for filing returns, as well as releasing refunds expeditiously to increase liquidity, the finance ministry said in its release. 

Scrutiny by the department reduced to 0.25 per cent of all Income Tax Returns (ITRs) in AY19, from 0.55 per cent in AY18, shows data by the finance ministry.

The department had unveiled an amnesty scheme Vivad se Vishwas earlier this year, to settle 4,83,000 direct tax cases pending in various appellate forums.

Last year, the government had slashed corporation tax rates from 30 per cent to 22 per cent, while that for new manufacturing units was reduced to 15 per cent. Dividend distribution Tax was also abolished.

In order to bring in transparency in official communication, a Document Identification Number or DIN was introduced, wherein every communication would carry a computer generated unique number. 

“Similarly, to increase ease of compliance, the Department has proceeded with pre-filling of I-T returns to make compliance more convenient for individual taxpayers. Compliance norms for start-ups have also been simplified,” the ministry added.