New tax reforms in Indian Income tax introduced from August 2020

Taking the help of Information and Technology and conceived the idea of Faceless assessment, the Central Government of India, in the last few years has taken various steps to reduce human interface between the taxpayer and Income tax administration to ensure consistency, transparency, and increase in efficiency in the ability of Tax administration with the help of information and technology.  The Central Government has rolled out a taxpayers’ charter and faceless assessment as part of the government’s effort to easing the compliance for assesses and reward the “honest taxpayer”.  To strengthen and simplifying the country’s tax system, the government also launched the Transparent taxation = Honoring the Honest platform.

New tax reforms in Indian income tax salient features of faceless assessment scheme

Data-driven selection of cases for scrutiny using data analytics and artificial intelligence.

Abolition of territorial jurisdiction.  Return of taxpayer belonging to one city would be scrutinized anonymously by Assessing Officers based in another city.

Automate random allocation of cases to assessment units through the computer.

Centralized issue of notices using unique document identification number (DIN) through electronic modes.

No human interface and no need to visit the income tax office.

All responses to be submitted electronically.

Team-based assessments and team-based review.

Basing on the Income-tax Return filed by the assesses, the taxpayer will receive notice under section 143(2) of the Income Tax Act through his registered e-mail if his case was selected for faceless scrutiny assessment. Then the taxpayer should file a reply by the date specified in the notice through his e-filing account.  There is no need to visit the department personally.

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After analyzing the reply filed by the taxpayer, if the Assessment Unit is satisfied with the reply, the assessment unit shall prepare a draft assessment order which will be subjected to a computer-run Risk Management Strategy tool.  RMS shall identify if the case needs to be reviewed by the Review Unit. If there is no Review or after Review, there are no modifications, then a final assessment order shall be received by you.

If the Assessment Unit requires further information then, the taxpayer will receive another notice under section 142(1) along with a questionnaire in the e-filing account on the registered email id along with the real-time SMS alert. After analyzing the reply filed by the taxpayer, the Assessment Unit will finalize the assessment accordingly. 

In a nutshell, the main moto in the introduction of faceless assessment is to reduce human interference by using Information Technology and also abolish territorial jurisdiction over the taxpayer to eradicate corruption.

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