Transparent Taxation
Prime Minister Narendra Modi, on August 13, 2020, launched the platform ‘Transparent Taxation – Honouring the Honest’ aimed at easing compliance and expediting refunds, thus benefiting honest taxpayers. The unveiling took place via video conferencing. This platform is meant to honour the honest taxpayers of the country and will initiate major tax reforms aimed at bringing transparency in income tax systems and empowering taxpayers.
The three main features of the platform are faceless assessment, faceless appeal, and taxpayers’ charter. The focus is on making the tax system people-centric and public-friendly: banking the unbanked, securing the unsecured, funding the unfunded, and honouring the honest.
Taxpayers’ Charter
The 2020-21 Budget had announced a taxpayers’ charter to be adopted by the Central Board of Direct Taxes (CBDT) to ensure trust between a taxpayer and the administration and reduce harassment.
The charter mandates the IT Department to hold its “authorities accountable for their actions” and states that the department would provide fair, courteous, prompt, and reasonable treatment as well as professional assistance to all taxpayers. The officers shall treat taxpayers as honest “unless there is a reason to believe otherwise”.
The charter also bars the tax officers from disclosing taxpayer information unless authorised by law and also respect the privacy of a taxpayer.
Also, the department shall provide “fair and impartial appeal and review mechanism” and take decision in every proceeding within the time prescribed under the law. The IT Department will have to periodically publish standards for service delivery and provide a fair and just system to resolve tax issues in a time-bound manner.
The charter also decrees the department to allow every taxpayer to choose an authorised representative of his choice and provide a mechanism for lodging a complaint, and its prompt disposal.
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Initiatives by IT Department
The IT Department has been working on simplification of direct tax laws and increasing transparency in communication. The introduction of Document Identification Number (DIN), wherein every communication of the department would carry a computer-generated unique document identification number, was a major step in this regard.
Similarly, to increase the ease of compliance for individual taxpayers, the IT department has moved forward with the pre-filling of income tax returns. Compliance norms for start-ups have also been simplified.
The Direct Tax Vivad se Vishwas Act, 2020, was also introduced to settle tax disputes.
Moreover, the IT department has undertaken several measures to promote digital transactions and electronic modes of payment. It has made efforts to ease compliances for taxpayers during the Covid-19 pandemic by extending statutory timeliness for filing returns and releasing refunds expeditiously to increase liquidity in the hands of taxpayers.