Budget 2019:Tax filing structure redefined with 'faceless assessment' system

The goal is to cut down the interaction between taxpayer and income tax office and eliminate malpractices

Budget 2019:Tax filing structure redefined with 'faceless assessment' system

The relationship between the tax authorities and tax-paying citizens of the country is going to be completely redefined with the introduction of the ‘faceless assessment’ system. Expected to be launched in a phased manner in FY 2019-20, Finance Minister Nirmala Sitharaman spoke of introducing the electronic assessment system that will eliminate the need for human intervention while assessing tax returns.

What is a faceless assessment?

With financial scrutiny or assessment done via the faceless channel, on one end the taxpayer would not have to interact in-person with any tax officials, similarly, on the other end, an assessing officer would not have the personal details of the assessee, whose records he/she will be examining.

By leveraging technology, the IT department will be able to complete the task of verification, scrutiny and assessment, all done anonymously in a transparent and speedier manner.

Related: Budget 2019: What it means for you?

Why the change?

The tax reportage of the country is still abysmally low, with many people evading tax, indulging in illegal practises or not filing the tax at all. “The existing system of scrutiny assessments in the Income Tax Department involves a high level of personal interaction between the taxpayer and the Department, which leads to certain undesirable practices on the part of tax officials,” FM Sitharaman stated in her maiden Budget 2019 speech.

In order to provide the right digital tools to the Income Tax department and provide an impetus to the tax reportage, this first-of-its-kind assessment system aims to reduce and eliminate any malpractices.

What to expect?

To begin with, e-assessments will be carried in an event that require attention due to specific transactions or discrepancies in filings. A particular case for scrutiny will be randomly allocated to an assessment unit and notices to the assessee will be issued electronically from a central cell. 

This central cell will be the single point of contact between the assessee and the IT department. The personal details and location of both the taxpayer and assessing officer will remain anonymous.

What is the way forward?

While the original recommendation for a jurisdiction-free and faceless assessment came from an internal task force at the CBDT, the government has entrusted a high-level direct tax panel to structure the mechanism of the system-based verification channel. 

The task force will be headed by Akhilesh Ranjan from the CBDT, Ritvik Pandey- Joint Secretary from the Revenue Department, Chief Economic Advisor K Subramanian and the former CEA Arvind Subramanian will be a special permanent invitee to the task force.

The task force will have to submit a report by July 31 that will set up the modalities for faceless assessment, look at ways to reduce the compliance burden of taxpayers, minimise litigation, and become a channel of communication between GST officials, the customs department and the financial intelligence units. 

The task force will be asked to simplify and rewrite tax laws, incorporating international best practises while prioritising the country’s economic needs.  Read this Key Highlights from Union Budget 2019

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