Indian Prime Minister Narendra Modi launched a new tax scheme today via video conferencing. The unveiled scheme is named as ‘Transparent Taxation – Honoring The Honest’ and has been portrayed as a scheme that will benefit the honest and sincere taxpayers of the nation.

“In the last six years, banking the unbanked, securing the unsecured and funding the unfunded has been our focus. Today, it is the start of a new journey – Honoring The Honest. When the life of an honest taxpayer of the country becomes easy, he moves forward and develops, then the country also develops and leaps forward. Our effort is that our tax system should be seamless, painless, faceless.” – PM Narendra Modi. 

The virtual launch of the new platform was attended by big names in the business like Ratan Tata, Anand Mahindra and Uday Kotak.

Tax is one of the most important components of the government’s income. More taxes gives the government the space to launch more socially benefitting policies. The current number of taxpayers in the country is merely 1.5 crore. This is just 1% of the 135 crores of the Indian population. The focus on tax reforms is to motivate people to pay taxes. This can be done by decreasing the tax rate or simplifying the process for them to come out. 

About the new scheme

  • The new platform will consist of faceless assessment, faceless appeal, and taxpayers charter. 
  • To reduce the manual procedure, the faceless assessment will be decided randomly by a computer. Also, the pattern won’t be a fixed one and will be changed from time to time.
  • With the use of technology; machine learning and AI, geographical boundaries within the nation will be abolished. A tax officer of another state can overlook the transaction of the taxpayer of another state.
  • The service related to faceless appeal will start from September 25 but the faceless assessment and taxpayers charter will start from today.
  • Tax return security has been declined to one-fourth to 0.26% of all returns filed.

Easing the current process

Indian tax administration has often faced allegations of harsh treatment and their insensitivity towards the taxpayers. A high number of cases has witnessed taxpayers and tax administration locking horns with each other.

The issue of alleged tax harassment gathered a lot of attention last year. The founder of India’s largest coffee shop chain, VG Siddharta of Cafe Coffee Day, committed suicide under sustained pressure from the I-T department. He left behind a note accusing tax authorities of torturing and mentally harassing him. 

Review

Until now, if you were issued a notice, you would have to visit the tax office and answer their questions. These sessions could have gone for long. One of the main benefits of the scheme is to make the process more fair and courteous. This is done so that the Income Tax department give respect to taxpayer’s dignity.

A people-centric and public-friendly approach will be followed from now onwards. The faceless income tax assessment has been introduced to reduce the scope for corruption. If the income tax administration and the income taxpayers will not meet, the scope of pressurising will decrease significantly. As there is no communication, chances of corruption will also take a huge hit.

Making the process depend more on Artificial Intelligence will surely reduce the harassment faced by taxpayers. But, will it also reduce the tax collection? Many of the taxpayers are forced to pay tax then only they do it. Before that, they are unwilling to pay as they consider it as their income which should not be shared. Reduction of mental stress is important but how will it impact the tax collection is another point to keep an eye on. Until, next time.

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