IT’s Slowly Getting Better

Context:  The tax administration is making a steady but steadfast shift from being an enforcer to a facilitator, and from opaqueness to transparency. 

Issues in Tax Administration System

• The complexity of tax laws

• The high element of discretion in tax administration 
• Undue focus on search, seizure, and probe operations.
• Inability to verify the authenticity of official communication from the tax department
• Excessive human interface and multiplicity of physical visits to the tax office.

Paradigm Shift 

• Faceless e-Appeal Scheme: to eliminate human interface between the appellant and the commissioner of income-tax (appeals). 
• Technology-enabled Tax communication:  i.e mandatory computer-generated unique document identification number (DIN). 
• The e-Assessment Scheme, 2019: eliminates the interface between the assessing officer and the assessee, optimises the use of resources through functional specialisation, and introduces team-based assessment. 
• Minimises individual discretion: even when the officer is issuing the first notice or a query letter, it is vetted by two layers of superiors.

• The corporate tax rate cuts

•  Introduction of dynamic tax jurisdiction: will also help in eliminating multiple interactions with the same tax official.
• The scope of information for the pre-filing of ITR is being further expanded: to include information such as house property income, capital gains from securities, bank interest, and dividends.
• Modified version of Form 26AS: provides information regarding TDS and TCS relating to PAN besides certain additional information, including details of other taxes paid, refunds, and TDS defaults. 
• Form 26AS information helps honest taxpayers with updated financial transactions while filing their returns, minimising the chances of the return getting selected for scrutiny.
• Litigation management and dispute resolution: to reduce litigations and costs attached to them.
• Monetary thresholds for filing of appeals at all levels have been substantially raised. 
• The ‘Vivad se Vishwas’ scheme provides an easy resolution of pending tax disputes. 

Conclusion: Simplified tax administration system can raise government revenue while minimising economic and administrative inefficiency, and keeping the system as simple and transparent as possible.