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As the country’s direct taxation regime moves towards a new system of faceless assessment, appeals and taxpayers’ charter, there are concerns that this may have been expanded across the board a bit prematurely. Even the first batch of cases of faceless assessment picked up last year are yet to be completed, along with incomplete functionalities in the online system developed for rolling out the scheme.
With respect to the latest technology to support the expansion of faceless assessment across the board, there are concerns of the technology backend not being fully developed. “The first batch of faceless assessment cases is yet to be completed. Some of the IT functionalities in the backend are missing, so it may have been premature to expand at this juncture,” an official in the know said.
Another person aware of the developments said that transition problems are expected as the tax administration moves to the faceless system, adding that the new system may lead to more queries and hence, more scope for legal disputes over the coming years.
“The experience of the pilot project was mainly for returned income cases, having only some junk cases of mismatch. So not much dispute could have arisen there. But going ahead, with more data, more queries might get raised to the taxpayer. There is a likelihood that taxpayers’ responses may not be sufficient in terms of tax administration and hence, may create scope for legal disputes,” the person said.
Queries sent to the Central Board of Direct Taxes and Revenue Department by The Indian Express remained unanswered. A senior Income Tax Department official, however, said the backend technological system has “run well so far” for the pilot project of faceless assessment and that’s why the decision to expand was taken up.
Though, on the issue of a possibility of rise in disputes, the official said that it will be known only after a few years once these faceless assessments come through. For instance, with the Centre having launched faceless assessment for 58,000 cases last October, around 14 per cent of those cases have been disposed of in the nine months since the launch.
Cross-country comparisons on the taxpayers’ charter also show that legislative backing for the charter is missing in India unless it’s notified to amend the law along with a lack of specific timelines as was earlier in the case of the I-T Department’s Citizens’ Charter.
The results of the pilot project for faceless assessment were promising, with the backend technology “running well so far”. But with time, more data and more queries could be raised from taxpayers, creating scope for more legal disputes for the tax administration.
For instance, the Citizens’ Charter defines the timeline for issuance of refund along with interest to be six months for electronically filed returns and nine months for other returns or the timeline for decision on application for rectification is two months and one month for giving effect to appellate/revision order. In the taxpayers’ charter, however, specific timelines are not there, with it stating that the taxpayers are expected to be honest and compliant, keep accurate records, respond and pay in time, and know the information and submissions made by their authorised representative, while the I-T Department is committed to treat taxpayers as honest unless there is a reason to believe otherwise, have fair and impartial appeal and review mechanism and provide timely decisions.
“It’s not too specific, whereas the earlier Citizens’ Charter had more specific rights with precise timelines. There is also no mechanism for making these rights justifiable. The government should consider issuing case-specific guidelines for the charter,” a tax expert said.
As per a 2017 OECD survey which covered 55 countries, 32 had taxpayer rights defined in law while 13 countries had the taxpayer rights set out in documents published by the administration but not in law. The remaining 10 countries did not have rights recognised in either law or in administrative documents.
On Thursday, the government launched the ‘Transparent Taxation – Honouring The Honest Platform’ enabling a taxpayers’ charter, faceless assessment and appeals. The faceless assessment scheme and taxpayers’ charter came into effect from Thursday, while the facility of faceless appeals will become functional from September 25.
