PM Modi launches ‘Transparent Taxation’ With Other Direct Tax Reforms

‘Transparent Taxation’ platform was launched by PM Narendra Modi on 13th August 2020 around 11 a.m., via video conference. The platform aims to remove any physical interface between the taxpayer and the income tax department.

FM Nirmala Sitharaman began addressing the entire nation. She stated that a lot of reforms have already been made under income tax laws. Some of them are the usage of DIN and Vivad se Vishwas scheme. To provide greater accountability and to create efficiency and transparency in the income tax system, more reforms are being introduced.

PM Modi, who launched the platform, stated that the ‘Transparent Taxation’ platform is a part of structural reforms to direct taxation. It provides faceless assessment, appeals and taxpayers’ charter. He further noted that it is a people-centric and public friendly initiative where the focus is on ‘minimum government, maximum governance’. 

Through the platform, taxpayers who are honest and prompt in complying with the income tax laws will benefit. Every taxpayer is considered honest and will be treated so unless there is a reason to believe otherwise. The platform will create awareness among the taxpayers and help them understand the tax reforms through timely professional assistance from the department. Any mode of assessment other than the faceless design shall become invalid. However, there can be a few exceptions. 

The field officers of income tax cannot intrude and undertake any surveys without necessary permissions. Such actions can be carried out by investigation and TDS wings only after taking approval from the Chief Commissioner or an officer above that rank.

PM Modi continued to highlight the advantages of existing measures that reduce complexities in the procedures and tax rates. No income tax is charged on a net taxable income of up to Rs.5 lakh. Tax rates have also been reduced on the rest of the tax slabs. He emphasised that India is one of the lowest tax consuming countries in the globe concerning corporate tax.

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Faceless appeals will have a random allotment of cases without the need for personal visits by taxpayers. The cases shall be selected using data analytics and artificial intelligence. The tax authorities must conduct a review before passing the final order on any case in a time-bound manner. The review and appeal mechanisms must be fair and impartial. 

Every assessment will be faceless and conducted by a team of officers under the concept of dynamic jurisdiction. With this concept, the age-old practice of territorial jurisdiction will be done away. Moreover, the taxpayers can reply to notices electronically. It will eliminate the need for taxpayers to visit the income tax office personally. The assessment order will be drafted in one city, reviewed in another and finalised in the third city.

The taxpayers’ charter was released by outlining the objectives. Any proceedings shall happen without the intrusion of the privacy of the taxpayer more than required under any inquiry, examination or enforcement actions. Further, the department will not disclose any taxpayer information unless required by law. The taxpayers will also be given a chance to choose their authorised representatives for proceedings, and there will be procedures laid down for raising any complaints and disposal thereof.

Overall, the motive is also to reduce the cost of compliance by officers while following tax laws. The officers will be held accountable for all their actions and must follow the service delivery standards periodically published by the government.

The charter, in turn, expects the taxpayers to:

• Be honest and compliant by disclosing full information.
• Be informed and aware of tax laws and seek help from the department if needed.
• Maintain accurate records as per the income tax law.
• Have a complete knowledge about the information shared and submitted by his authorised representative.
• Comply within the time limit given under the income tax law.
• Make a payment of taxes within the timelines defined as per the income tax law.

The taxpayers have been requested to reach out to the taxpayer’s charter cell under the Principal Commissioner of income tax appointed for every zone to comply with the charter.

The initiative looks promising to reduce the errors involved in passing orders and improving the efficiency of the tax department. The faceless system must be tried and tested before being implemented across the country. One can expect initial implementation challenges as not all taxpayers may be accustomed to the digital mode of communication.

For any clarifications/feedback on the topic, please contact the writer at annapoorna.m@cleartax.in