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PM Modi launches Transparent Taxation-Honoring the Honest platform, faceless appeal and assessment introduced

The 'Transparent Taxation - Honouring the Honest' platform includes 3 major reforms- faceless assessment, faceless appeal and taxpayers' charter.

Aug 13, 2020 12:20 IST
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Prime Minister Narendra Modi launched 'Transparent Taxation-Honoring the Honest' platform on August 13, 2020. The platform includes three major reforms- faceless assessment, faceless appeal and taxpayers' charter. While the faceless assessment and taxpayers' charter reforms have been brought into effect from today itself, faceless appeal service will be available from September 25. 

The platform aiming to carry forward the journey of direct tax reforms was launched through a video conference. The Prime Minister highlighted that since the past six months, it has been their focus to honour the honest.

The event saw participation from various chambers of commerce, trade associations, chartered accountants' associations and "eminent" taxpayers. Union Finance Minister Nirmala Sitharaman was also present on the occasion along with Minister of State for Finance Anurag Singh Thakur.

Significance

Union Finance Minister Nirmala Sitharaman stated that the system of “Transparent Taxation–Honoring the Honest” was put into place by CBT to realise PM Modi's vision is to empower the taxpayer, to provide a transparent system and honour honest taxpayers. The platform aims to be a transparent and accountable system using data analytics and artificial intelligence.

Over recent couple of years, the Central Board of Direct Taxes (CBDT) has carried out many major tax reforms in direct taxes.  In 2019, the corporate tax rates were cut from 30 percent to 22 percent and for new manufacturing units, the rates were reduced to 15 percent. The Dividend distribution tax was also abolished. The direct tax reforms were carried out with the aim to reduce tax rates and simplify direct tax laws.

 

Objective

The transparent taxation system will aim to make every rule-law, policy people-centric and public friendly. 

What is Transparent Taxation?

Transparent Taxation means  bringing greater transparency in the functioning of the centre regarding tax reforms and compliance measures. PM Modi stated that the efforts aims to ensure a seamless, painless, faceless taxation system. 

What is Transparent Taxation–Honoring the Honest?

• The “Transparent Taxation–Honoring the Honest” will comprise three main services:

- Faceless Assessment: Under the new system, faceless team will take over all tax scrutiny matters. The faceless team will be chosen randomly by a computer, hence can be in any part of the country, not necessarily in the state where the matter comes up. This will help avoid unnecessary tax disputes.

- Faceless Appeal: Tax appeals have also been made faceless. Under this, the tax payer can make tax appeals without physically interacting with the tax collector. 

- Taxpayers' Charter: The Prime Minister highlighted that the taxpayers charter is a big step in the country's development journey. Now the tax department will have to trust the taxpayers and will not be able to look at any tax payer with distrust. The tax payer will have the right to appeal in case of any dispute.

The Prime Minister said that the new platform will begin a new taxation journey in the 21st century. Transparent taxation will make taxation process more public-centric and people friendly.

The new transparent taxation system aims to ease compliance burden of the tax payers, bring in a fair system of taxation, eliminating physical interface between the tax payer and the system and to bring in a certain amount of certainty. 

Why has the new Transparent Taxation system been introduced?

Prime Minister Narendra Modi stated that there was a time when there used to be a lot of talk about reforms and sometimes decisions were taken out of compulsion or pressure and were called reforms. He noted that due to this, the desired results could not be achieved but now this thinking and approach have both changed.

Background: Key Past Tax Reforms

Several initiatives were taken by the CBDT to bring efficiency and transparency in the functioning of the Income Tax (IT) Department in the past. Some of the initiatives include bringing more transparency in official communication through the Document Identification Number (DIN), as per which every communication of the department would carry a computer-generated unique document identification number.

The IT Department has also carried out prefilling of income tax returns to make compliance more convenient for individual taxpayers. The compliance norms for startups have also been simplified.

The IT Department also brought out the Direct Tax "Vivad se Vishwas Act, 2020", under which declarations for settling disputes will be filed. This will help resolve pending tax disputes. 

Besides this, monetary thresholds for filing of departmental appeals in various appellate courts have been raised to reduce taxpayer grievances and litigation. The IT Department has also taken measures to promote digital transactions and electronic modes of payment.

The department also made the efforts to ease compliances for taxpayers during the COVID-19 pandemic by extending statutory timeliness for filing returns and also releasing refunds expeditiously to increase liquidity in the hands of taxpayers.

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