PM Modi to launch facility to ‘honour’ honest taxpayers on Thursday

It is not immediately clear if the platform to be launched by Modi will provide for specific incentives to honest taxpayers. (File image)

Prime Minister Narendra Modi will launch a platform for ‘honouring the honest’ taxpayers on Thursday via video conferencing, in sync with the government’s stated policy to become more taxpayer-friendly. The move follows a recent reiteration by the finance minister Nirmala Sitharaman that a taxpayers’ charter would soon be made part of the Income Tax Act, delineating taxpayers’ rights and obligations. It is not immediately clear if the platform to be launched by Modi will provide for specific incentives to honest taxpayers. It is, however, likely that it would be dedicated to disseminating information on tax department’s transparency initiatives.

The government has been taking a number of steps over the last few years to reduce the taxpayers’ hassles – direct tax rates have been made benign and the compliance procedures have been made easier with technological support. On the one hand, it is using technology, a large repository of database on transactions, continuous indirect tax chain and increased interface between direct and indirect tax wings, to curb tax evasion and on the other, it is keen that no honest taxpayer is harassed and compliance is easy.

The Central Board of Direct Taxes (CBDT) in a statement cited the fact that last year the corporate tax rates were reduced to 22% from 30%, and for new manufacturing units the rates were reduced to 15%. Dividend distribution Tax was also abolished.

Among new measures for improving transparency in tax administration, the board said introduction of Document Identification Number (DIN) wherein every communication of the income-tax department would carry a computer-generated unique document identification number is meant to eliminate arbitrary actions of individual tax officials.

Recently, CBDT said that it successfully completed first phase of faceless assessment in which the income-tax department disposed of about 8,000 cases of the 58,000 selected in October, 2019. Further, the finance ministry last week said that number of returns selected for scrutiny by the department had reduced to 0.25% of total returns in assessment year 2018-19 after rising to 0.55% in the in the assessment year 2017-18, the year of demonetisation.

Similarly, to increase the ease of compliance for taxpayers, the I-T department has moved forward with pre-filling of income tax returns to make compliance more convenient for individual taxpayers. Compliance norms for startups have also been simplified.

Further, raising of monetary thresholds for filing departmental appeals in various appellate courts have been raised, which is aimed at reducing litigation. Several measures have been taken to promote digital transactions and electronic modes of payment, it added. With a view to providing for resolution of pending tax disputes, the I-T department also brought out the direct tax “Vivad se Vishwas Act, 2020” under which declarations for settling disputes are being filed currently.

Further, the I-T department has worked to ease compliance for taxpayers during the Covid times by extending statutory timeliness for filing returns, and also released refunds expeditiously to increase liquidity in the hands of taxpayers. “The upcoming launch of the platform for “Transparent Taxation – Honoring the Honest” by the Prime Minister will further carry forward the journey of direct tax reforms,” the CBDT said. The event will be witnessed by various chambers of commerce, trade associations, chartered accountants’ associations and eminent taxpayers, apart from the officers and officials of the I-T department.

“An honest taxpayer would expect immediate receipt of the tax refunds and avoid any adversarial tax assessment approach. While the finer aspects of the incentives available for an honest taxpayer is to be released yet, any steps taken by the government will be felt by an honest taxpayer only when they aren’t burdened with arbitrary assessment of tax return and harassment of tax collection against arbitrary tax demands,” Aravind Srivatsan, partner at Nangia Andersen LLP said.