Future Generali

What is the long term impact of faceless assessments of income tax?

On October 8, 2019, the Income Tax department introduced the faceless e-assessment scheme, which eliminates physical interaction between you and the assessment officer.

Cases chosen for scrutiny can be resolved online. The officer is selected randomly to assess the case. Selection of cases is based on specific criteria, which includes those with serious discrepancies.

This will increase taxpayer compliance, transparency, competence and functional specialisation. It will result in improved assessment quality, focused approaches, better monitoring, and expeditious disposal of cases. 

But what would the impact of this new scheme be in the long-term? Will it be beneficial or cause more hassles? Let’s find out. 

  • Eliminating Subjectivity and Bias: The existing arrangement of scrutiny assessments involves a lot of personal communication between taxpayers and officials. It led to several undesirable practices on the part of the tax officials. By eliminating the human interface, the scheme will increase objectivity and decrease harassment and any form of bias.

  • More Internal Efficiency and Teamwork: There are four units set up in the new scheme. First, the assessment unit identifies issues with tax liability by seeking evidence from taxpayers. Second, the verification unit examines the evidence and conducts cross-verification of the case. Third, the technical unit provides expertise on the relevant issues. Fourth, review units do a final review of the assessment to determine if it is complete and accurate in all aspects. This will make the assessment process streamlined and very efficient.

  • Improved Transparency from Random Selection: Each of the four units have a randomly selected officer handling cases. The computer decides which official is assigned to which case. This brings about more transparency internally for assessments in this case. It brings more third-party views into the mix and allows a taxpayer to interact with different people, each specialised in their own stream, to reach a desirable response.

  • Requires Focused and Early Filings from Taxpayers: Taxpayers will need to cooperate by filing tax returns on time for cases to be assessed faster. They will need to provide more focused and honest responses with proper evidence. Officials will be specific in queries, so the taxpayers will need to follow the same practice too. The system aims to create an atmosphere for all taxpayers to be motivated in filing returns voluntarily. Now, taxpayers would need to file their returns on time with focused responses should a case of scrutiny arise.

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