Income Tax reforms – Transforming Tax administration through Faceless Assessment

Abstract

For the last seventy years the assessment process under the Indian taxation system has been very painful and unlined for the assessee as well as the department. The assessments were based on geographical restrictions and requires the interface between the taxpayers and the authority leading to Inspector Raj. There was an uneven distribution of litigations under the jurisdiction of Appellate Authorities leading to an undue delay in disposal of litigations. Since liberalization Government of India is under a continuous process of managing the increasing size of database of taxpayers but due to lack of digitalization and trained IT professional there has always been failures with the result that the litigation trend was increasing. In order to ensure the simplification, transparency and efficiency in the Indian taxation system and the tax administration the government of India has introduced the scheme. The Faceless Assessment scheme was introduced through Finance Bill, 2019 as one of the landmark reforms in the Indian taxation system to facilitate electronic assessment in scrutiny and best judgement assessment processes. The scheme is not an instant initiative rather it is coupled with a lot of digital reforms since liberalization. Some of the major digital reforms are e-filing of income tax returns, CPC-TDS, refund banker,  e payment of income tax.

The paper covers a comprehensive research of tax reforms undertaken before implementing the Faceless Assessment Scheme under the Income Tax. The study has covered all the phases of digitalization and the capacity building to make the journey successful.