System-based verification to track those with dirty money

NEW DELHI: The government has decided to expand the ambit of the panel drafting a new income tax law to include a reduction in the compliance burden through process simplification, faceless and anonymised scrutiny and verification of returns as well as a systems-based verification of financial transactions as new terms of reference.
The additions were made on Monday with the government also asking the panel headed by CBDT member Akhilesh Ranjan to suggest ways to reduce litigation and faster disposal of cases across judicial forums in addition to data-sharing between tax authorities.
The committee was set up 18 months ago but was reconstituted after the earlier members could not agree on a report. It was constituted on a prod from Prime Minister Narendra Modi who had addressed senior tax officials and wants the new law to reflect modern-day reality.
A similar exercise was undertaken close to a decade ago but was abandoned as the committee had recommended drastic changes, including removal of almost all tax exemptions to reduce the tax rate.
Sources said the move for system-based verification of financial transactions was meant to help track those with illicit wealth, which was not getting fully reported in the system. In addition, it will help in the exercise to roll out pre-filled tax returns, which is proposed to be rolled out over the next few months.
The idea to roll out these returns also ties in with the move to simplify the procedures to reduce the compliance burden on ordinary tax payers, who often find the process burdensome. Similarly, the plan to shift to faceless verification, scrutiny and assessment has been in the works for a while as the government wants to devise a system through which tax payers don’t face harassment.
While reworking the terms of reference, the finance ministry has also inducted chief economic adviser Krishnamurthy Subramanian as a member in place of his predecessor Arvind Subramanian. Pragya Saksena too has been appointed member along with Ritvik Pandey, a joint secretary in the revenue department.