19th November 2020
Jugal Gala - DVS Advisors LLP
India has been gradually moving up the ladder in the ease of doing business index from 134 in 2013 to 63 in 2020 thanks predominantly to a spate of e-governance initiatives including SPICe for company incorporation, electronic MOA and AOA, single platform for reporting under FEMA, online IEC application for cross border trade, computerization of Government departments and several other state reforms. As a measure of easing compliance and rewarding honest taxpayers, Central Government has brought in faceless assessment scheme to simplify the process of tax proceedings. MSI's Chennai accounting member DVS Advisors LLP provides further insight.
The case for faceless assessment is probably the single most prominent initiative, post GST, which has the potential to completely change the perception about tax enforcement machinery in the country.
Structure of the scheme
Merits of the scheme
Apart from the obvious perks such as savings in time, cost and energy, 24×7 active infrastructure, going green and ensuring social distancing, the following tangible advantages can be envisaged:
Future of proceedings and departmental functions
With the passage of Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (“the Act”), the Central Government proposes various amendments and introduction of new provisions in the Income Tax Act, 1961 to auger faceless assessment for various departmental functions like vesting of jurisdiction, collection of information, enquiry, valuations, transfer pricing assessments, income escaping assessment, issuance of notice, revisions and rectifications, etc., apart from normal scrutiny assessment. Hence, the future of income tax proceedings is expected to be made predominantly online and simplified to provide ease of compliance to assessees.
Transparency in fiscal enforcement is the need of the hour in a developing economy intending to attract foreign capital. Tax enforcement was one of the main sources of corruption in the country and this, coupled with country’s fiscal laws, was being considered as a serious impediment in attracting foreign investors to invest in the country. Despite the challenges, the Government has come up with such a bold and transformative initiative, the first of its kind globally of this scale, which has the potential to transform regulatory enforcement environment in this country.
DVS Advisors LLP is a contemporary tax, legal and financial solutions provider with a specific focus on Direct, International and Indirect Taxation.
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