What is Transparent Taxation scheme?
On Tuesday, Prime Minister Narendra Modi launched the “Transparent Taxation — Honouring the Honest” platform, unveiling a raft of measures that aim to ease the compliance burden and reward honest taxpayers. Broadly, the three pillars of the platform are faceless assessment and appeal, to eliminate the physical interface between the tax department and the taxpayer, and a Taxpayers’ Charter that delineates the rights as well as obligations of the taxpayer. In a country with a high degree of complexity of the tax system, which often comes in the way of compliance, the attempt to make it “seamless, painless and faceless” is welcome.
What is the Taxpayer Charter?
The income tax department is often accused of being overzealous in its pursuit of meeting the budgeted tax collection targets. This often translates to assessing officers raising unreasonable demands which leads to tax disputes and long-drawn-out litigation.
In the past few years, the CBDT has carried out major tax reforms in the country in the direct taxes. In 2019, the Corporate Tax rates were reduced from 30 per cent to 22 per cent and for new manufacturing units, the rates were reduced to 15 per cent. Dividend distribution Tax was also abolished.
The main aim of the tax reforms in the reduction rates of the taxes and on the simplification of direct tax laws to bring more transparency with the newly introduced Document Identification Number (DIN). Every communication with the Department will now carry a unique document identification number.
To increase the ease of compliance for taxpayers, the Income Tax Department has allowed the prefilling of income tax returns to make compliance more convenient for individual taxpayers. Compliance norms for startups have also been simplified.
The Income Tax Department has also introduced ‘Vivad se Vishwas Act, 2020’ for settling pending tax disputes. To reduce taxpayers grievances, monetary thresholds for filing of departmental appeals in various appellate Courts have been raised. Also, digital transactions and electronic modes of payment are promoted.
1- Faceless Assessment
2- Faceless Appeal
3- Taxpayers’ Charter
Key highlights of Transparent Taxation- Honoring the Honest launch event
1- As announced by Prime Minister Modi, Transparent Taxation- Honoring the Honest will have faceless assessments, faceless appeal and taxpayer charter. The faceless appeal will come into effect from September 25 while the faceless assessment and taxpayer charter will come into effect starting today.
2- Prime Minister Modi further stated that banking the unbanked, securing the unsecured, funding the unfunded is part of new governance.
3- As per Prime Minister Modi, every rule, law and policy in his governance is taken out of the power centric approach and is subsequently converted into People-Centric and Public Friendly.
4- Prime Minister Modi stated that earlier decisions were taken either under pressure or were taken desperately and were named reforms. However, reforms in Modi governance is based on policy and not on piecemeal. Reforms cannot be stopped as it is an infinite process.
5- Prime Minister Modi stated that the tax system of India was constituted in the period of slavery. However, after India gained its Independence, a few changes came into effect but a large part remained unchanged.
6- Prime Minister of India further stated that the taxes have been reduced in our country along with the complex tax-paying process for the ease of taxpayers. Under the new tax regime, there’s no tax up to the income of Rs. 5,00,000. Also, the tax has been reduced in all the tax slabs. As per Prime Minister Modi, India is one of the lowest tax consuming countries in the world when it comes to corporate taxes.
7- The tax system of India should be seamless, painless and faceless. The seamless term here states that the IT Department must work to solve the problems of the taxpayers instead of confusing them and creating problems.
8- Prime Minister of India requested the citizens of the country to pay the taxes because this how the system works. He further added that taxpayers charter is a big step towards the development of the country.
9- With the introduction faceless assessment, every taxpayer of the country is assured fair, courteous and just behaviour. As per PM Modi, it is now the responsibility of the IT Department to take care of the taxpayer’s dignity. The department must trust the taxpayer and should not doubt anyone without proofs.
10- As per Prime Minister, in the FY 2012-13, out of all the tax returns filed, the scrutiny of 0.94 per cent cases was done whereas, in the FY 2018-19, the scrutiny of only 0.26 per cent cases was done. This clearly indicates that the scrutiny of the cases has reduced by 4 times under the current government.
11- In the last 6-7 years, the number of people who have filed income tax returns has increased by about two-and-a-half crores which are still less for a country having a population of 130 crores.
12- PM Modi further requested the citizens that those who can pay taxes but are not under the tax slabs must come forward to pay taxes to achieve the vision of self-reliant India.