The Prime Minister of India recently unveiled the ‘Transparent Taxation – Honoring The Honest’ platform to appreciate and incentivize honest taxpayers in the nation. The key goal of this initiative is to introduce an element of transparency to income tax systems and empower taxpayers.
Features of the Transparent Taxation Platform
The platform is characterized by three central features: faceless assessment, faceless appeal, and a taxpayer charter. These developments will modernize the way income tax operations are conducted in India. The faceless assessment and taxpayer charter were implemented immediately from the platform’s launch, while the faceless appeal feature commenced on 25th September 2020.
Faceless Assessment
The faceless assessment is a system that aims to eliminate any personal interaction between the taxpayer and the income tax department. This feature eradicates the need for the taxpayer to visit the income tax office. Instead, taxpayer selection is achieved through systems using analytics and Artificial Intelligence, improving efficiency and objectivity in the process.
Faceless Appeal
In this new system, appeals are randomly assigned to any officer across the country. The identity of the officer judging the appeal will not be disclosed, further eliminating any risk of bias or influence in the decision-making process.
Taxpayer Charter
The taxpayer charter is a document that provides an overview of both the rights of the taxpayers and the responsibilities of the tax officers. This charter aims to create a balanced and fair relationship between the two parties involved.
Other Recent Direct Tax Reforms
The Central Board of Direct Taxes (CBDT) has implemented several significant tax reforms in recent years, primarily focusing on the simplification of direct tax laws and reduction in tax rates. For instance, Corporate Tax rates were decreased from 30% down to 22% in 2019. Further cuts were made for new manufacturing units, with rates being dropped to 15%. Additionally, the Dividend Distribution Tax was abolished in the same year.
Initiatives to Improve Efficiency and Transparency
The CBDT has also taken several measures to enhance the efficiency and transparency of the Income Tax (IT) Department’s operations. Notably, it introduced the Document Identification Number (DIN) to bring more transparency in official communication. This initiative requires every communication from the department to carry a unique, computer-generated document identification number.
Another initiative was the introduction of pre-filing income tax returns, which greatly increases the ease of compliance for taxpayers. In addition to these, the Direct Tax Vivad se Vishwas Act, 2020 was introduced to provide a resolution for pending tax disputes. All these initiatives are part of continuing efforts by the government to improve the tax system and promote fairness and transparency.
