Ease of Doing Business for MSMEs: Under the existing provisions of faceless assessment, the EVC-led authentication process was not available to certain companies, tax audit cases, etc., and were mandatorily required to authenticate the electronic records by the digital signature. The benefit has now been extended to them also.
Ease of Doing Business for MSMEs: Micro, small, and medium enterprises (MSMEs) have welcomed the government’s move to ease rules for authentication of electronic records in faceless assessment proceedings. The Central Board of Direct Taxes (CBDT) in a statement by the Ministry of Finance on Tuesday announced the amendment made to the Income-tax Rules, 1962 to authenticate electronic records submitted by taxpayers by electronic verification code (EVC) for the purpose of section 144B(7)(i)(b) of the Income-tax Act – faceless assessments instead of authentication through digital signatures.
“It is good that authentication of electronic records is now through EVC even as a large number of micro and small enterprises are dependent on chartered accountants for income tax-related work. This will help MSMEs further in business. The general practice among micro units has been that they outsource income tax and accounting-related tasks including bookkeeping. They simply note the expenses and pass on the receipts to CAs,” Animesh Saxena, President, Federation of Indian Micro and Small & Medium Enterprises (FISME) told Financial Express Online.
“Almost all MSMEs hire CAs for such tasks and so, they would have more responsibility to ensure that records are authenticated by CAs as earlier digital signatures were required for this. It is a good move though,” Pankaj Kumar Gupta, Director and Promoter of transformers manufacturer A Powertech Electricals told Financial Express Online. Under the existing provisions of faceless assessment, the EVC-led authentication process was not available to certain persons (such as companies, tax audit cases, etc.) and were mandatorily required to authenticate the electronic records by the digital signature, however, in order to provide the benefit of the simplified process of authentication by EVC to these persons, it has been decided to extend it to them as well, the ministry said. EVC is a 10-digit alpha-numeric code sent to the registered mobile number for electronically verifying documents.
“In my view, this will make authentication safer. While authentication through digital signature was also fine but in terms of safety, EVC-led authentication is more robust as OTP-based transactions are a norm today. Usually, entrepreneurs don’t get to know how many times their digital signature has been used wherever required by their team members who are authorised to use it, but now this issue will be addressed if the promoter uses his number for authentication,” DK Aggarwal, Chairman and MD, SMC Investments and Advisors told Financial Express Online. Aggarwal was the immediate past president of PHD Chamber of Commerce and Industry.