The Government of India launched a new system for tax returns assessment in October 2019. In this system, income tax assessments can take place without the help of a physical interface between the taxpayer and a tax officer.
This new method of assessing returns involves the use of technologies such as Artificial Intelligence, which seeks out problematic returns filed and then randomly assigns an assessment officer to tackle them. With this system, the randomness of assigning officers is expected to bring in transparency and objectivity to the process. This is mostly due to efforts on the part of the government to try and bring down taxpayer complaints of harassment by officers. This system is also part of the Indian government’s efforts to make governance in India digital by moving processes online.
The system was introduced only in October in 2019, and within a month, more than 58,000 returns were selected to be digitally assessed under the faceless assessment system. India has 74 million direct taxpayers who filed tax returns or got TDS deducted and eventually, the scope of the investigation in potential fraud cases is expected to include more people.
How will you be impacted?
1. The launch of the faceless assessment system is expected to bring in a lot of ease and transparency for taxpayers. They are now unlikely to be visited by or called to meet tax officials to answer questions. IT returns will be scrutinised using advanced technology for potential mismatches or under-reporting of income. If a discrepancy is found, it will result in electronic communication with the taxpayer with minimal human intervention.
2. However, those chosen for assessment are also provided with an opportunity for face-to-face interaction to make their case (if they choose to appeal against the decision of the tax authorities).
3. At the same time, any conflicts will also be resolved online. Taxpayers will now be allowed to upload documents online to make their case, and the officer will be able to assess it and accordingly issue a result.
4. All taxpayers need to keep their email address and phone number updated on their PAN cards and with the I-T Department. The department has also advised taxpayers to keep checking their emails regularly for communication. This is mostly because the taxpayer is expected to respond within 15 days in case of a query from the government.