Context: Prime Minister Modi has launched the 'Transparent Taxation- Honoring the Honest' via a video conference. This will benefit the honest taxpayers of the country, whose hard work powers the progress of the nation. This will reform and simplify the tax system in India.
Relevance:
Prelims: Current events of national and international importance.
Mains: GS II- Important aspects of governance, transparency and accountability, e-governance- applications, models, successes, limitations, and potential; citizens charters, transparency & accountability and institutional and other measures.
About the platform for 'Transparent Taxation– Honoring the Honest
- CBDT has put in place a platform to realise Modi’s vision to empower taxpayers.
- CBDT has been running a pilot project since September 2019 after the faceless assessment scheme was introduced in law by the Finance Act of 2018.
- Transparent Taxation aims to bring greater transparency in the functioning of the centre regarding tax reforms and compliance measures.
- The efforts aim to ensure a seamless, painless, faceless taxation system.
- The seamless term here states that the IT Department must work to solve the problems of the taxpayers instead of confusing them and creating problems.
- It is also aimed at bringing transparency in income tax systems and empowering taxpayers.
- Main features of the platform are-
| Faceless assessment |
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| Faceless Appeal |
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| Taxpayer Charter |
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- The faceless assessment and taxpayer charter will come into place immediately from the launch, while the faceless appeal is going to be applicable from 25th September 2020.
- This will reform and simplify the tax system in India to benefit the honest taxpayers of the country, whose hard work powers the progress of the nation.
- Since 2014, there have been consistent attempts at revamping the tax administration.
- The launch of the platform carries forward the journey of direct tax reforms, following the several measures that have been taken by the CBDT to aid taxpayers.
Concerns
- Tax officials are opposing the new faceless tax assessment program.
- They see problems in the lack of consultation and inadequate resource to implement the changes.
- Tax officers feel that faceless tax assessment may reduce tax collection and raise pressure on officers that are under stress to meet lofty tax targets for the current fiscal year.
Other Recent Direct Tax Reforms:
- The Central Board of Direct Taxes (CBDT) has carried out several major tax reforms in direct taxes in recent years.
- The focus of the tax reforms has been on reduction in tax rates and on simplification of direct tax laws.
- Corporate Tax rates were reduced from 30% to 22% in 2019.
- For new manufacturing units, the corporate tax rates were reduced to 15%.
- Dividend Distribution Tax was also abolished in 2019.
- The CBDT has also taken several initiatives for bringing in efficiency and transparency in the functioning of the Income Tax (IT) Department, such as:
- Bringing 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.
- Pre-filing income tax returns to increase the ease of compliance for taxpayers and to make compliance more convenient for individual taxpayers.
- Direct Tax Vivad se Vishwas Act, 2020 to provide for the resolution of pending tax disputes.
Other initiatives by CBDT
- To effectively reduce taxpayer litigation, the monetary thresholds for filing of departmental appeals in various appellate Courts have been raised.
- Promoting digital transactions
- Easing compliances during the COVID times by extending statutory timeliness for filing returns
- Releasing refunds expeditiously to increase liquidity in the hands of taxpayers.
What was the need for this platform?
- A persistent issue the current administration has received criticism on is the issue of taxation, despite genuine attempts at improving the tax structure.
- India's tax administration has been known for tax harassment, where overzealous well-intentioned officials while raising tax revenues, have dampened growth and at times done more damage than good.
- The government introduced faceless income tax assessment to reduce the scope for corruption and overreach by officials.
- The issue of alleged tax harassment by officers gained much attention in India after VG Siddharta, the founder of India's largest coffee shop chain, committed suicide in July and left behind a note accusing tax authorities of persecuting him.
