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To cut discretion at the hands of income tax officials and promote transparency, Finance Minister Arun Jaitley announced introduction of e-assessment for all taxpayers in 2018-19 Budget. The government said that by amending the Income-tax Act, a “team-based assessment with dynamic jurisdiction” will be rolled out across the country that will almost eliminate person-to-person contact. The E-assessment will be applicable to taxpayers, including individuals and companies.
Dynamic jurisdiction or a jurisdiction-free assessment implies that a taxpayer in Delhi, for instance, could be assessed by a tax officer randomly selected by the online system of the tax department located in any other part of the country. Such an assessment is aimed at minimising the scope for corruption and discretion by tax officers. The Indian Express had reported on January 23 about the plan to introduce jurisdiction-free assessment in the Budget.
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“We had introduced e-assessment in 2016 on a pilot basis and in 2017, extended it to 102 cities with the objective of reducing the interface between the department and the taxpayers. With the experience gained so far, we are now ready to roll out the E-assessment across the country, which will transform the age-old assessment procedure of the income tax department and the manner in which they interact with taxpayers and other stakeholders. Accordingly, I propose to amend the Income-tax Act to notify a new scheme for assessment where the assessment will be done in electronic mode which will almost eliminate person to person contact leading to greater efficiency and transparency,” Jaitley said during his Budget speech.
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The government will notify the e-assessment scheme, which is aimed to impart greater efficiency, transparency and accountability “by eliminating the interface between the assessing officer and the assessee in the course of proceedings to the extent technologically feasible”, the accompanying documents to the Union Budget stated. The scheme also proposes to optimise utilisation of the resources through economies of scale and functional specialisation and introducing a team-based assessment with dynamic jurisdiction, it said. The relevant amendments to Section 143 Income-tax Act will be effective from April 1 this year.
The feature of ‘functional specialisation’ implies a tax official will not handle all stages of assessment. The roles of tax officials are likely to be split in different functions of assessment, verification, tax demand, recovery and orders.
“It is proposed to amend the section 143 (of Income-tax Act), by inserting a new sub-section (3A), after sub-section (3), enabling the Central Government to prescribe the aforementioned new scheme for scrutiny assessments, by way of notification in the Official Gazette,” the Budget document said. The government in the Budget also said that the notification for e-assessment scheme will specify the relevant modifications and adaptations, with every notification to be laid before Parliament and no direction shall be issued after March 31, 2020.
Last September, Prime Minister Narendra Modi in his address to tax officers at Rajaswa Gyan Sangam, the annual tax conference of CBDT and Central Board of Excise and Customs (CBEC), had emphasised on the importance of minimal human interface in the tax administration’s dealings. He had said that a push should be given to “e-assessment” and anonymity of proceedings using technology, so that vested interests do not impede the due course of law.
