The Government had a vision of bringing about the simplification of tax laws, and it initiated many reforms in direct and indirect taxation regimes, towards this objective. A few important steps towards this were e-assessment, faceless assessment on a pilot basis, reduction of litigation by Revenue authorities, and reduction of corporate tax rates, etc.  This ease was further reinforced by the Finance Minister's announcement of incorporating the Taxpayer Charter as part of the statute in the Budget 2020-21. The Hon'ble Prime Minister launched a platform 'Transparent Taxation, Honoring the Honest' on 13 August 2020, which will further the journey of direct tax reforms in India.
The intention behind establishing this platform is to honor the honest taxpayers who display sincerity with respect to payment of taxes. The purpose of this platform is to accomplish a transformation of the income tax department, from a tax collector to a tax facilitator. The Hon'ble Prime Minister has also urged the citizens to look into their conscience and examine whether they can contribute toward the development of the nation by paying correct taxes. Further, the emphasis of the Government is to make every rule, law, policy people-centric, and public friendly.

Brief features of the platform are as under:

  • The platform has been divided into three buckets - Faceless Assessments, Faceless Appeal, and Taxpayers' Charter. Faceless assessments and the Taxpayers' Charter have become operational with immediate effect from 13 August 2020, while Faceless Appeal will be operational from 25 September 2020.
  • Towards this end, it has now been provided that any order of assessment passed by the Officer, which bypasses the National e-Assessment Center would be bad in law. However, assessment orders passed under international tax charges or those involving cases of search/ seizures would be excluded from the above.

Taxpayers' Charter lists down their commitment towards the taxpayers and the expectations from the taxpayers as under:

Commitment towards the taxpayers:

  1. Provide fair, courteous and reasonable treatment;
  2. Treat taxpayer as honest and tax compliant unless proven guilty;
  3. Provide a mechanism for appeal and review;
  4. Provide complete and accurate information;
  5. Provide timely decisions;
  6. Collect the correct amount of tax;
  7. Respect the privacy of the taxpayer;
  8. Maintain complete confidentiality;
  9. Hold its authorities accountable;
  10. Enable a representative of choice;
  11. Provide a mechanism to lodge complaints;
  12. Provide a fair and just system;
  13. Publish service standards and report periodically;
  14. Reduce the cost of compliance.

Expectations from the taxpayers:

  1. To be honest and compliant;
  2. Be informed about the consequences of non-compliance;
  3. Keep accurate records in accordance with the law;
  4. Know what the representative does on his behalf;
  5. File complete and correct documents within the  timeframe;
  6. Pay taxes in stipulated time.

The taxpayers can approach the Taxpayers' Charter Cell under the Principal Chief Commissioner of Income-tax in each zone for compliance with this Charter.

Our Comments

The Taxpayers' Charter unveiled by Hon'ble Prime Minister marks an important milestone in India's history. The acknowledgement from the Government to respect taxpayers' privacy and confidentiality provides much-needed confidence in taxpayers, especially MNCs. While the Charter is a big step forward in making tax administration more of a facilitator, equally important will be a strong mechanism of accountability instilled in the field officers to act responsibly, keeping in mind the spirit of the Charter. With the legislative sanctity to the Chapter in place, the taxpayers now look forward to the detailed guidance.

Originally published 18 August 2020.

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