PM Modi’s faceless tax assessment may face fundamental roadblocks; concerns mount over back-end support

Even the first batch of cases of faceless assessment picked up last year is yet to be completed.

Prime Minister Narendra Modi’s efforts to bring reforms in the Indian tax system by introducing the faceless assessment facility may face fundamental roadblocks on its way. While the government has rolled out a new system of faceless assessment, appeals, and taxpayers’ charter, it is a major concern that the facility has seen the light of the day without full preparation and thus the implementation may suffer. Even the first batch of cases of faceless assessment picked up last year is yet to be completed, along with incomplete functionalities in the online system developed for rolling out the scheme, reported The Indian Express. 

The first batch of faceless assessment cases is yet to be completed as some of the IT functionalities in the backend are missing, so it may have been premature to expand at this juncture, an official told the paper. There are concerns that the faceless assessment facility is rolled out even as the back-end is not fully developed. Another source who is known to the matter added that the transition problems are expected as the new system may lead to more queries and hence, more scope for legal disputes over the coming years.

On the brighter side, new steps bring new roadblocks too, which are rectified over time. “Even GST had a lot of roadblocks when it was introduced but they are addressed over time,” Shailesh Kumar, Director-Direct Taxation, Nangia Andersen India, to Financial Express Online. If we wait to fix all the roadblocks before rolling out a scheme, it will substantially delay the project, Shailesh Kumar added.

However, a senior Income Tax Department official assured the paper that the backend technological system has run well so far for the pilot project of faceless assessment and that is why the Prime Minister took the step forward. On the other hand, he also said that the issue of a possibility of the rise in disputes will be known only after a few years once these faceless assessments come through. 

Meanwhile, Finance Minister Nirmala Sitharaman had said that the faceless tax scrutiny assessment and appeal would help ease the compliance burden of taxpayers and increase fairness and objectivity in the tax system. She had added that the changes will ease the compliance burden, bring in a fair objective and there shall not be any physical interface between the department and the taxpayer, which will bring in the certainty of information. The FM further announced that any communication from the Income Tax Department without a computer-generated DIN, be it a notice, letter, order, summon, or any other correspondence will be invalid and would not stand in the eyes of law.