By Nageshwar Patnaik in Bhubaneswar, August 26, 2020: Nobody loves paying taxes. Even those who know that taxation is essential are unwilling to pay taxes. Ill-informed people think this is injustice.

But the moot question is how does one run the government? The government protects the life and property of the citizens, maintains law and order, and settles dispute between citizens in a just and orderly way through the law-courts, defends the country from foreign enemies, manages free education, provides hospitals for the sick and attend to sanitation.

Tax is imperative for the benefits of the people for their assured security of life and property, by the sound roads, by public hospital, public school and good sanitation. Hence, it is all the important to for people to pay taxes. The money virtually will be back to them in the form of public service and facility. By design, taxes are a shared enterprise.

The government needs to be funded in a manner mutually agreed upon by Parliament and the People, based on the principles of fairness and ability to pay. Taxes are a collective obligation, and their payment marks one of our civic duties as Indians.

However, in India, people by and large do not disclose their incomes. Tis is evident form the statement of Prime Minister Narendra Modi that of a total population of 130 crore people, only 1.5 crore pay income tax.

During the current financial year, 5.78 crore individuals filed returns disclosing income of financial year 2018-19. Incidentally, of these,1.03 crore have shown income below Rs 2.5 lakh and 3.29 crore individuals disclosed taxable income between Rs 2.5 lakh to Rs 5 lakh. Of the 5.78 crore returns filed during this financial year,4.32 crore individuals have disclosed income up to Rs 5 lakh.

The Modi-led government has taken several measures to bring in transformation in both direct and indirect taxes. The objective is to create a taxpayer-friendly ecosystem by introducing greater transparency, simplification, and ease of meeting tax compliance.

Modi recently launched Transparent Taxation “Honouring the Honest” platform and by that lists out the rights of Assesses in a statute under the Income Tax law. The e-assessment scheme is known as the Faceless Assessment Scheme. The recent introduction of the Faceless e-Assessment process by the CBDT for income tax returns is a noteworthy step towards achieving the objective.

Assessee personally or physically need not have to visit the tax office or face the tax authorities for any assessment, appeal or any other ancillary tax administrative work. Interestingly, the taxpayers will no longer be attached to a specific territory or jurisdiction or office for assessments as the CBDT has instead started a faceless, randomized and completely electronic assessment scheme, eliminating all human interfaces.

The New Delhi headquartered National e-Assessment Centre (NeAC) has been empowered as the main gateway for communication between the taxpayers and the tax authorities. Besides, Regional e-Assessment Centers across 20 cities including Delhi, Mumbai, Kolkata and Chennai, under the faceless assessment scheme, will be coming us as per the notification on the August 13 last.

Most importantly, taxpayers need not have to visit territorial jurisdiction of tax officers or the income tax department on receiving income tax scrutiny or assessment notices. The National e-Assessment Centre shall serve a notice on the Assessee under sub-section (2) of section 143, specifying the issues for selection of his case for assessment. The Assessee may, within fifteen days from the date of receipt of the notice referred to in clause (i), file his response to the National e-assessment Centre. The procedures have detailed out in Notification No. 60/2020 dated 13 Aug 2020.

In fact, all communications between the National e-assessment Centre and the Assessee, or his authorized representative, or any other person shall be exchanged exclusively by electronic mode without any physical intervention. All departmental internal communications between the National e-assessment Centre, Regional e-assessment Centers and various units and between the team of authorities shall be exchanged exclusively by electronic mode.

This clearly indicates the shift towards rationalization, simplification, greater transparency, ease of managing tax issues and creating an overall taxpayer-friendly ecosystem. The faceless e-assessment system for income tax, will go dons in the history as a milestone initiative towards achieving these goals and India is the first country to implement this system and this can help the country in coping up with current issues.

Incidentally, once the new assessment system is implemented, there will be a significant reduction in the delay in tax assessments and audits because the system would automatically flag unwanted actions or deference. Several units or teams will be set up to assess, review and verify tax demands or orders during the draft stage before being issued to the taxpayers. There will also be a specialized unit to assist in cases that require legal, industry-specific or economic expertise.

Nevertheless, there will be certain cases where the Chief Commissioner or the Director-General in charge of the Regional e-assessment Centre may approve the request for a personal hearing based on his opinion of a deemed fit case to the situation. If that happened, hearing shall be conducted exclusively through video conferencing, including use of any telecommunication application software which supports video telephony, in accordance with the procedure laid down by CBDT.

Modi’s recent prescription hopefully will end tax terrorism, which had been driving the genuine taxpayers up the wall along with the evaders. At the same time, the pressure on fixing targets on income tax employees must end so that the genuine taxpayers do not get affected. It is time to give a leeway to genuine taxpayers, who more often than not build systems to account for every tax liability – whether they can afford to pay or not.

Modi government must ensure that the tax department is seen as a friend and ensure that the government policies should assure the taxpayer of good services and social security.

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