Prime Minister Modi made several announcements on Thursday to simplify the income Tax System and reduce the tax department's fear from the minds of taxpayers. The Prime Minister has announced major income tax reforms such as faceless assessment, taxpayer charter, and faceless appeal. The PM also launched the new income tax platform ' Transparent Taxation, honoring the honest ' (respect to transparent taxation-honest). The faceless assessment and textile charter have come into effect from Thursday, and the system of faceless appeal will come into effect from September 25. The major advantage of these reform measures would be that income tax officers' torture would no longer be complicit. Let's know how it affects taxpayers in this article.
What kind of changes will the introduction of faceless assessment bring to our tax regime?
The concept of Faceless Assessment was brought as an e-assessment in the year 2019. Now the faceless assessment is being implemented for all assessments under the 'Transparent Taxation-Honest Honours' platform. Under the faceless assessment, the taxpayer and the tax authorities will not contact each other directly. In addition, the selection process of investigation cases will also be in auto mode, and selection will be made randomly with the help of data analytics and artificial intelligence. The selection and communication of investigation cases are also proposed to be centralized. Various units will do the assessment, and it will be a team and not one person. This will create an unknown system where the taxpayer will not know who his assessment officer is.
What will be the benefit of the common taxpayers from this new system of faceless assessment?
If the investigation cases will be selected randomly and in auto mode, the income tax authorities will not be able to choose the investigation case arbitrarily. Further, the assessment process will also be in different parts and will be done by various units as a team. This will reduce corruption in the system and also stop harassment of the taxpayer. However, due to many papers being online, there may be some technical hurdles in the implementation of the presentation.
What is the Taxpayer Charter, and why was it needed?
The Taxpayer Charter is not a new thing. It existed from the year before 2004. In my opinion, the Textile Charter is like the directive principles enshrined in our Constitution, which are not enforceable like fundamental rights. The Taxpayer Charter provides rights and duties to taxpayers in very general terms. In my opinion, the Taxpayer Charter will not see any significant impact unless it is implemented under the Income Tax Act and the law.
What kind of rights will this Charter give to honest taxpayers?
The Textile Charter is not going to bring about any significant change in the lives of taxpayers. Unless it is legally applied, it is just like a decorative object placed for a mere display. Earlier textile charters were also less compliant and violated.
What will the tax base be increased by these reforms in this new system and tax system?
This system is not going to increase the taxpayer base. The problem is in our society. Since taxpayers consider politicians to be dishonest and they think that their money is not utilized. Unless there is a fundamental change in our society's behavior, it is a dream to come forward voluntarily for tax payments. We are in a society where tax evasion is not considered a matter of sin or stigma. The entire society will have to change to increase the taxpayer base. That is exactly the point concerning population control also.
What more reforms need to be made in the link to tax reforms?
The most important thing in terms of tax reforms is the simplification of tax laws. Tax laws have been so complex for years that many pages are filled even in only one section of the Income Tax Act. Even two chartered accountants will have different opinions on reading the same provision. Only bureaucracy is responsible for making the laws so complicated. Then, they misuse the laws. The Government needs to make the tax authorities responsible for the punishment on misdeeds.
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