Question: Given the ongoing digital transformation, are there any predictions for how technology might be leveraged to improve tax administration and compliance?

Response given by CA (Dr.) Suresh Surana: Data analytics as well as artificial intelligence have been adopted by tax authorities to simplify and streamline the tax administration, reduce errors, tackle tax fraud, identify credit fraud, etc. Additionally, the adoption of technology may enable successful and sustainable tax reforms, ensure the proper taxation of digital economy, and reduce the obstacles to compliance.

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In preceding years, the involvement of technology in tax administration has progressed since the government has introduced the following:

a. Annual Information Statement: In addition to the high-value transactions and TDS/TCS details mentioned in Form 26AS, the Annual Information Statement (AIS) includes more transaction details therefore widening the ambit of income disclosure.

b. The CBDT’s e-Verification Scheme, 2021, an initiative encouraging voluntary tax compliance, allows the department to identify discrepancies between the information taxpayers report in their Income Tax Returns (ITRs) and information received from third-party sources like banks on interest and dividend income.

c. The Faceless Assessment Scheme introduced by the government eliminates the interface between the Assessing Officer and the taxpayer during the course of proceedings, to the extent that is technologically feasible and therefore promotes optimum utilisation of resources through economies of scale and functional specialization.

d. Additionally, the income tax portal allows taxpayer to e-file and e-verify their tax returns, respond to outstanding tax demands, file audit reports and certificates, respond to e-proceedings etc.

In line with the ‘Digital India’ initiative by the government of India, the Finance Minister, Smt. Nirmala Sitharaman, vide the Union Budget 2024 may announce policies, measures or schemes to further simplify the tax compliance, tax assessments and other administrative processes, including passing of rectification order, giving effects to the Order Giving Effect (OGE), transition of the tax credits in case of business structuring (mergers / demergers, slump sale, etc).

Disclaimer: The views and facts shared above are those of the expert. They do not reflect the views of financialexpress.com