The focus of the tax reforms has been on reduction in tax rates and on simplification of direct tax laws.
Prime Minister Narendra Modi has launched the platform for “Transparent Taxation – Honoring the Honest” via video conferencing on the 13th August 2020. Faceless assessment, faceless appeal, taxpayer charter are the three major pillars of the platform. These measures will help taxpayers in not only easy and simple assessment of the income tax return but also in responding to the income tax appeals.
CBDT has provided the structure which is transparent, efficient, accountable and this is what is being brought in. Using technology and data analysis, the platform is supposed to ease compliance burden, fair objective and just system. There will not be any physical intervention between the taxpayer and the income tax department.
The launch of the platform for “ Transparent Taxation – Honoring the Honest “ by the Prime Minister will further carry forward the journey of direct tax reforms.
The CBDT has already carried out several major tax reforms in the direct taxes in recent years.
“Today’s announcement is also the consolidation of significant policy reforms by the Govt. in the last few years – modified slab rate of taxation for individuals, significant reduction of corporate tax rates coupled with reduction of multiple tax holidays/ concessions, scrapping of dividend distribution tax and ease of compliances,” says Aravind Srivatsan, Partner, Nangia Andersen LLP.
Last year the Corporate Tax rates were reduced from 30 percent to 22 per cent and for new manufacturing units, the rates were reduced to 15 per cent. Dividend distribution Tax was also abolished.
The focus of the tax reforms has been on reduction in tax rates and on simplification of direct tax laws. Several initiatives have been taken by the CBDT for bringing in efficiency and transparency in the functioning of the IT Department.
Taxpayers can avail the new income tax regime from this financial year onwards and enjoy the benefits of relatively less documentation and greater ease of compliance increased liquidity in the hands of the taxpayer, and flexibility of investment choices.
There is expected to be more transparency in official communication through the newly introduced Document Identification Number (DIN) wherein every communication of the Department would carry a computer generated unique document identification number.
Similarly, to increase the ease of compliance for taxpayers, IT Department has moved forward with prefilling of income tax returns to make compliance more convenient for individual taxpayers. Compliance norms for startups have also been simplified.
With a view to providing for the resolution of pending tax disputes the IT Department also brought out the Direct Tax “Vivad se Vishwas Act, 2020” under which declarations for settling disputes are being filed currently. To effectively reduce taxpayer grievances/litigation, the monetary thresholds for filing of departmental appeals in various appellate Courts have been raised.
Several measures have been taken to promote digital transactions and electronic modes of payment. The IT department is committed to taking the initiatives forward and has also made efforts to ease compliances for taxpayers during the COVID times by extending statutory timeliness for filing returns as also releasing refunds expeditiously to increase liquidity in the hands of taxpayers.