All You Need To Know About Faceless Tax Assessment And Appeal

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Prime Minister Narendra Modi today launched a new platform aimed at bringing more transparency and simplicity in the taxation process. “A faceless tax system will give the taxpayer confidence on fairness and fearlessness,” the PM said in a video address after rolling out the platform, called ”Transparent Taxation – Honoring the Honest”, in a big push for tax reforms. The main features of the initiative are: faceless assessment and appeal, and a taxpayers’ charter. 

Here’s what the government’s latest move means for you, the taxpayer: 

Faceless appeals and assessment

The move is part of the government’s efforts to bring more transparency in the tax assessment system. By making the tax process “faceless”, the government aims to minimise human interaction between the individual taxpayer and the tax officials.

Under the new system, appeals will be automatically allotted randomly to any tax officer in the country. The identity of the tax officer will remain unknown to the taxpayer, and vice versa. The scheme aims to eliminate the interface between the taxpayer and the income tax department.

Tax experts say this will bring more fairness and confidence in the country’s taxation system, as the taxpayer and the tax officer will not know each other’s identity.

“The faceless assessments and appeals is a reform in the right direction… The administration will need to ensure that the right of being heard (natural justice) is not denied to the taxpayer,” said Sandeep Bhalla, partner, Dhruva Advisors.

Also, there will be no intrusive and survey-related actions by field officers. Only the investigation and TDS (tax deducted at source) wings will be able to do so after prior approval by officers of the Chief Commissioner or higher ranks.

The initiative will deem any assessment outside the faceless framework as invalid, unless an exception has been made. 

The new platform will enable the taxman to take up cases based on data analytics and artificial intelligence, eliminating human interface and abolishing territorial jurisdiction, with the exception of serious frauds, major tax evasion, sensitive matters, international taxes and black money or benami property-related cases. 

The tax assessee will also not be required to visit an income tax office.

“The reform is particularly relevant in cases of large corporates which go through scrutiny assessments or appeals each year,” Mr Bhalla added.

Taxpayers’ Charter

The taxpayers’ charter is a set of rules giving more rights to the income tax assessee, aimed at both empowering and encouraging the taxpayer to file returns in a time-bound and responsible manner.

Simply put, this initiative by the taxman will enable assessees to have a bigger say in raising complaints in tax-related matters, such as a delay in an income tax refund. 

According to the taxpayers’ charter, the Income Tax Department is committed to treating every taxpayer as honest unless proven otherwise, and provide a fair, courteous and reasonable treatment. It lays emphasis on taxpayers’ privacy and authorities’ accountability, and provides mechanisms for appealing and reviewing an assessment, as well as raise complaints.

Financial experts say the initiative will lead to better protection of the rights of individual taxpayers. 

“The taxpayers’ charter will provide an enforceable right to the taxpayer if the action or decision in every income tax proceeding is not taken by the tax department within the time prescribed under the Act,” said Gopal Bohra, partner, NA Shah Associates.

“It will also provide a mechanism for lodging of complaints and prompt disposal of such complaint of the taxpayer.”

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