Modi unveils Taxpayers' Charter: Faceless assessment and faceless appeals

While faceless assessment and Taxpayers' Charter came into effect from Thursday itself, the facility of faceless appeals will be rolled out from September 25

The income-tax (I-T) department will be accountable for its actions and taxpayers not satisfied with the department’s working can approach the specific cell in the (I-T) zone in their area, according to the taxpayers’ charter unveiled by Prime Minister Narendra Modi on Thursday.

“An income tax officer will not get an opportunity to harass a taxpayer. Scrutiny will be allotted on a random basis. The assessment of a taxpayer in Mumbai could well be carried out by an officer in Chennai. It will put an end to needless litigation. This platform has big reforms like faceless assessment, faceless appeal, and the taxpayers’ charter — which are big reforms,” Modi said in his inaugural address via video-conferencing. 

“It will help reduce government interference. Our effort is to make the tax system seamless, faceless, and painless.”

The charter enshrines rights of assessees within the I-Tax Act. With this, India has joined countries like the US, Australia, and Canada, which have such a provision in their laws.

Union Finance Minister Nirmala Sitharaman said the platform brought in a transparent, efficient, and accountable tax administration. 

“It uses data analytics and artificial intelligence,” she said.

The Central Board of Direct Taxes (CBDT) has ordered that only officers in the Directorate of Investigation and Commissionerates of the Tax Deducted at Source will act as authority for carrying out surveys.

The facility of faceless appeal will be rolled out on September 25.

The charter has a time-bound process for dealing with the taxman, a redress mechanism, and provisions for respecting privacy and maintaining confidentiality.

It also lists out the obligations of the taxpayer.

The I-T department had rolled out faceless e-assessment in October last year, covering Mumbai, New Delhi, Kolkata, Chennai, Bengaluru, Hyderabad, Ahmedabad, and Pune. Communication to the taxpayer goes from the National e-Assessment Centre (NeAC) in New Delhi. 

The NeAC allots cases at random to assessment units.

Of the more than 58,000 cases picked for faceless assessment, 8,700 have been disposed of, with a target for completion by October.

Abhishek Rastogi, partner, Khaitan and Co, said while the faceless assessment was a great beginning, there could be various challenges in terms of the appropriate explanation that were needed to be understood by the person assessing the tax liability. “It is hoped that the new system will provide appropriate opportunity for the taxpayer to explain the complex transactions and get a fair order in a time-bound manner," he said. 

Modi added that over the past six years, the I-T department had reduced complexity, lowered taxes, reduced litigation, and increased transparency, tax compliance, and trust. 

Scrutiny by the department reduced to 0.25 per cent of the I-T returns (ITRs) in the assessment year 2018-19, from 0.55 per cent in the previous year, shows the data by the finance ministry.

“Faceless e-assessment and e-appeals, selection of cases for assessments through data analytics and artificial intelligence, and random assignment of cases to tax officials should further aid in ensuring an objective and transparent determination of cases,” said Gautam Mehra,  partner and leader (tax and regulatory), PwC India.