In the 2019 Union Budget, Finance Minister Nirmala Sitharaman announced the launch of a faceless e-assessment scheme, heralding the changing tax administration in the times to come. It is a part of the government’s broader reforms agenda to drive economic growth and create additional jobs. The government is also looking to attract foreign investors, who prefer destinations with a transparent tax system coupled with ease of doing business. It is noteworthy that in the last few years, India has also jumped several positions in the World Bank’s Ease of Doing Business rankings.
The most significant advantage that this faceless scrutiny scheme has to offer is the elimination of human interface linking the assessing officer and the assessee. In this scenario, once a case is selected for scrutiny, the assessee would file all the documents or responses online, and the officer selected to assess the case could be sitting anywhere in the country to scrutinise the documents.
The faceless e-assessment scheme is expected to bring about faster disposal while improving scrutiny of cases. Making tax scrutiny a hassle-free process for the assessee would improve India’s competitiveness, positioning it with leading markets who boast of transparent and friendly tax regimes.
Hassle-free process
At the moment, there are almost 5.65 crore taxpayers in the country, who stand to benefit from this faceless scheme. At present, IT assessments are done at the geographical jurisdiction of the case, and an increase in the number of scrutiny cases adds to the pressure on the existing infrastructure in the particular jurisdiction. Through this e-assessment scheme, there would be an end to the relevance of geographical assessments for processing of returns, which will remove the pressure on the existing infrastructure.
Further, the assessing officer will be randomly selected based on a computer algorithm, thereby eliminating certain undesirable practices on the part of tax officials and ensuring smooth functioning of the IT department in the future. The assessing officers would be based in different parts of the country and communicate with the assesses only through emails. The assesses, too, would be required to submit relevant documents or responses only through emails. This would completely stop the practice of the assessee being called for scrutiny multiple times to cater to various queries. For unique cases, where the presence of the assessee is required, the permission of the Principal Commissioner of the IT department would be required. This would help assure the assessee of a just and fair order directed towards him.
Centralised authority
The only governing authority for the e-assessment system would be the Delhi-based National e-Assessment Centre. There would be some regional offices at places like Mumbai, Pune, Chennai, Hyderabad, Kolkata, Bangaluru and Ahmedabad. All notices for scrutiny would be issued only by the National e-Assessment Centre in Delhi, and the assessee would be given 15 days to respond.
Under the e-assessment scheme, a revised Form 26AS would also be introduced soon, which would have some details on taxpayers’ who have undertaken high-value financial transactions in a particular fiscal year. This can be cash withdrawals or deposits of higher denomination or a property sale or purchase. The additional data provided to the IT department would help them assess the tax returns seamlessly.
The faceless e-assessment scheme would also support the assessee with any IT-related queries and the responses for the same would be mailed in a stipulated time.
The move by the Finance Minister is in line with the vision of the Central government on Digital India. Many Indian businesses, despite the lockdown and most employees working at home, have managed to achieve 80-90 per cent efficiency — a feat which is attributable to the flagship Digital India programme. Even government machinery has been operating seamlessly amidst these troubled times, owing to the strong foundation laid by the various programmes. Initiatives such as the e-assessment by the Central government gain further importance in a post-Covid scenario. Such efforts would help increase the efficiency of the workings of the IT Department by reducing bottlenecks. Additionally, a harassment-free assessment system would further encourage people to voluntarily enter the formal tax system in the country.
The writer is Secretary-General of Assocham
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