Towards a faceless, fair and fearless tax system — a radical reform India needed

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August 21, 2020 7:15 AM

Since the last one year, the government has been undertaking several measures towards introducing a transparent and a hassle-free tax regime in the country. On these lines, the central government has reduced the corporate tax and abolished the dividend distribution tax.

With this new initiative, the government aims to widen the tax net from the current 15 million.With this new initiative, the government aims to widen the tax net from the current 15 million.

Prime Minister Narendra Modi’s move to reward taxpayers by introducing the taxpayers’ charter, which is a part of the broader reform agenda, would usher in a transparent tax environment in the country.

Tugging at the souls of non-taxpayers, the PM urged them to be a part of the nation-building exercise to make it self-reliant. Since the last one year, the government has been undertaking several measures towards introducing a transparent and a hassle-free tax regime in the country. On these lines, the central government has reduced the corporate tax and abolished the dividend distribution tax.

In the Union Budget 2019, the finance minister had announced the launch of the faceless e-assessment scheme, whereby there would be total removal of any interface between the assessing official and the assessee. This would bring in several advantages to the tax assessee. The PM also informed that the number of people filing returns has gone up by 25 million in the last 6-7 years. With this new initiative, the government aims to widen the tax net from the current 15 million.

Firstly, scrutiny of a tax assessee is a very cumbersome process, as she is expected to satisfy all the queries of the income-tax official concerned. She may have to physically visit the income-tax department several times, till all the questions are not resolved. This may, at times, also result in instances of departmental high-handedness or cases of personal bias.

However, with the new scheme, the assessing official is randomly chosen from anywhere in the country. Also, all the queries are supposed to be responded only through the official email. If the assessee has any questions, then she also has the option to ask the same to via the same email. She is given adequate time to respond to the query raised, thus making the whole experience a harassment-free one. The assessee will be assured for fair scrutiny in her case, and since the assessment official is also unknown to her, faster trail would be ensured.

The honest taxpayer plays a significant role through tax contributions towards nation-building. The income-tax department must recognise this position. The taxpayers’ charter is a positive step by the government in determining the rights and duties of the taxpayer.

As a part of the ongoing structural reforms, this move is in line with the ‘minimum government, maximum governance’ motto of the government.

The government has been promoting initiatives like Digital India. With technological advancements, the government will be putting in more emphasis on the use of technology for smoothening tax administration processes. This move would help in a faster refund process with the entire system going digital. The introduction of the document identification number (DIN) is also a significant step where every communication of the department would carry a computer-generated unique DIN.

At the moment, less than 2% of the country’s population pay taxes, as the PM pointed out. The reason is not that people don’t want to pay taxes; it is also because some of the processes are cumbersome. By introducing a liberal tax regime and acknowledging the contributions of the honest taxpayer in nation-building, the government is encouraging people to pay taxes voluntarily. We believe that soon there will undoubtedly be an increase in the contribution of direct taxes paid by taxpayers. By introducing these tax reforms, India is also fast becoming an attractive investment destination for countries that are on a lookout to shift base from other regions in a post-Covid-19 scenario.

The author is the president of the apex industry body Assocham

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