Economic activity reviving; GST collections good sign: CBDT chief Mody

Revival in economic activity brings hope of improvement in direct tax collections, says Central Board of Direct Taxes (CBDT) chairman P C Mody. He tells Dilasha Seth, in an interview, that 58,000 cases will be assessed through the faceless mechanism by October. This has eliminated territorial jurisdiction and substituted individual discretion with team-based assessment. It has brought transparency and objectivity to the process and will end harassment of taxpayers, he adds. Edited excerpts:

With the economy expected to face a recession this year, what does the outlook for direct tax collection look like? Do you at least aim to meet last year’s level of mop up of around Rs 10.58 trillion against this year’s target of Rs 13.1 trillion?

We can’t say anything about that yet. All I can say is that yes, this pandemic has had an impact, but the collection position is quite okay. As compared to last year, we are not too bad on that. There is just 20 per cent dip. But the way the economic activity is resuming, I am sure things will improve day by day. We hope that the second half is better. The very fact that economic activity is reviving gives us the hope. GST collection is a good barometer, which have shown a pick-up in June. However, it is too early to comment on the target.

How has the implementation of faceless assessment drive been so far? As per the figures released by the income tax department, of the 58,000 cases, 8,000 have been disposed of under faceless assessment and 300 have faced additional tax demand.

Earlier, the system was territorial jurisdiction, where individual officer was the whole and sole to the assesse, from what response he gives to what he has to ultimately decide. He had an enormous amount of discretion available to him. We are trying to change all that now by creating this faceless assessment scheme. We have created a national e-assessment centre (NEAC), which becomes the focal point. Whatever communication goes to the taxpayer will be from this NEAC. It randomly allots cases to different assessment units spread over the country, what it is doing right now. These assessment units will not correspond to the taxpayer directly. They will talk through the NEAC only.

To what extent will it end harassment of taxpayers at the hand of officers?

First, what’s important is the random allotment of cases against territorial-based earlier. Second, these e-assessment units are not an individual officer-centric, but team based. The team comprises the assessing officer, additional commissioner and principal commissioner. Individual discretion is gone. We are distancing cases from territory, and secondly, instead of one person, three people are applying their mind, bringing more objectivity to it. It will be communicated through email only, so no physical interface. Once the replies come, they are examined by the assessment units. 

What is the timeline for faceless assessment for the 58,000 cases as 8,000 cases are disposed of so far?

We will try to compress the time as much as possible, may be by October. Everything is auditable now as it is done on digital media. We will be able to assess why it is taking unnecessary time and examine it. Whether it is to do with the assesses not responding or time, or an issue from the tax administration front. That clarity and transparency is there. In those 8,000 cases, we felt that there was no need for any addition. Or what addition was proposed was accepted by the taxpayer. But in 300 cases, we felt that certain issues have been added where rationale is not clear or they ought not to have been added, or this point has not been considered at all. Those cases are merely 300 in number and they are not final as yet. Assessees of these 300 will be given time to explain the gap. After that, many may get dropped after the reply and many may get an addition.