‘Transparent Taxation- Honoring the Honest’ is the extended version or a modified model of the E-assessment Scheme 2019 introduced by the Government of India in September 2019. This module brings out the honest and rightful duties of the taxpayers and states the expectations to be fulfilled in their respective parts.
The CBDT (Central Board of Direct Taxes) proceeded on the passing of the Notification No. 60 & 61/2020 with Order F.No 187/3/2020 dated 13th August 2020 for the implementation of the Faceless Assessment, Faceless Appeal, and the Taxpayers’ Charter in the country. Meanwhile, Faceless Assessment and Taxpayers’ Charter have already come into processing from immediate effect (13th August 2020), Faceless Appeal will come into being from 25th September 2020. With effect from 1/04/2020, the Finance Act 2020 inculcated section 119A in the Income Tax Act to empower the CBDT to adopt a mechanism that could facilitate the entire horizon of tax-paying in the nation. It issues orders, instructions, and stipulated guidelines to supervise and regulate the adoption of Taxpayers’ Charter.
In brief, the Taxpayers’ Charter aims at setting out the rightful duties and obligations of the taxpayers in the country. Many countries such as Canada, Malta, Australia, New Zealand, etc have already implemented such a scheme to preserve the authenticity and prevent the confronted exploitation of the taxpayers at the hands of tax directives in the taxing departments.
It has been specifically mentioned in the charter that the tax departments should provide a ‘fair, courteous, and a reasonable’ treatment to all the sections that comprise the taxpaying communities. As per the norms of the Charter, the tax officers are to comply with 14 responsibilities to support the interests of the taxpayers.
Below stated are the 14 responsibilities of the Income-tax officers in compliance with the Indian Taxpayers’ Charter 2020:-
1) To provide a balanced mechanism for a ‘fair, courteous, and a reasonable treatment’;
2) to treat taxpayers as honest members of society;
3) to provide a mechanism for appeal and review;
4) to provide complete and accurate information regarding tax returns and implied related documents;
5) to provide and form a basis for timely decisions;
6) to collect the correct amount of taxes;
7) to respect the utmost autonomy of the taxpayers;
8) to maintain secrecy and confidentiality of certain related prospects;
9) to hold the specific authorities accountable for their actions;
10) to enable the representatives of choice;
11) to provide a direct platform to record complaints;
12) to form a basis for a right & just system;
13) to publish service standards and report periodically; and
14) to reduce the final recorded cost of authoritative compliance.
The fact should be highlighted that the law already states provisions regarding the assessment of the above rights and duties in one form or the other. In the same capacity, the provisions of section 147/148 of the Income Tax Act provides a basis to re-assess the assessment under section 147. This implies that the Assessing Officer must have an appropriate reason to state the reported income escapade. This clearly supports the itinerary fact that until and unless the tax officers have a reason to support their reported claim against the taxpayers, they shall treat the taxpayers as honest and truthful.
In line with the above-stated rights of the taxpayers, there are 6 presuppositions or obligations on the part of the taxpayers to be fulfilled as per the Taxpayers’ Charter.
6 obligations of the taxpayers are:-
1) Be honest and compliant with the norms of the Taxpayers’ Charter;
2) be informed of recent occurrences;
3) keep accurate records;
4) know what the assessing representative has to adhere to on his behalf;
5) respond to the officials in time when asked; and
6) file and pay the reported taxes on time.
With the aim to ensure the supervision and regulation of the in-order happening of events under the scheme, the CBDT constructs and provides scope for the establishment of certain technical bodies.
1) National e-assessment Centre (NeAC): This body is presented to conduct the events under the scheme in a centralized manner. The main purpose is to provide jurisdiction in accordance with the provisions of the charter.
2) Regional e-assessment Centres: Such bodies are constructed to conduct the e-assessment of proceedings under the controlling embodiment of the Principal Chief Commissioner.
3) Assessment Units: These technical units take forward the functions of registering assessments for the identification of points or issues imperative for the determination of any liability as directed by the Income Tax Act 1961.
4) Verification Units: These units are established to carry out the sole functions of verification under the charter. Verification of documents, cross-verification, inquiry, the examination of financial statements, etc are some superficial tasks performed by these bodies.
5) Technical Units: These units are the embodiment of providing technical assistance in the field of information technology, legal, accounting, forensic, transfer pricing, data analytics, management, etc that may be required in certain cases.
6) Review Units: As the name suggests, these bodies are responsible to assess or review the draft assessment order to check whether the facts, relevant evidence, judicial decisions, etc are stated in accordance with the draft order.
As NeAC is the final approval authority in the hierarchy of Taxpayers’ Charter, all the orders, documents, validations, etc are processed through its medium only. The NeAC, after assessment of a case, will assign the selected case to an apt assessment unit for the purpose of ReAC through an automated allocation system. Once a case is designated to the assessment unit, the NeAC has the approved authority for the following:
– Obtaining relevant information from the taxpayer such as documents, evidence, validation, etc;
– transferring the case to the verification team for conducting an inquiry or for the purpose of verification; and
– Admission of technical assistance from the technical units in the required horizon.
In order to put a proper check on the activities of tax authorities and to make sure that the rights of the taxpayers are not exploited at the hands of the tax officials, the taxpayers can get direct access to the Taxpayers’ Charter Cell under Principal Chief Commissioner of Income-Tax in the specified zone.
It is to be noted that the government is also expected to set up a directive body that can superintend the activities of the tax officials in the eyes of the Taxpayers’ Charter.
The Indian Income Tax department serves as the ultimate body that oversees the activities of all the implemented taxes and other facilitated horizons. India’s Taxpayers’ Charter clearly states all the prerequisites for the taxpayers and the tax collectors and makes sure that an overall check is supervised over them from time to time. It would not be wrong to state that all the directives, responsibilities, and guidelines that are mentioned in the charter are already incorporated in the law beforehand. In simple terms, the Taxpayers’ Charter can be a reminder that aims at spreading awareness regarding the rights and obligations of the taxpayers in the light of the new finance budget 2020. It should be noted that any relationship between individuals thrives on the openness of trust, sincerity, and loyalty of the people involved. Therefore, in simple terms, the ultimate aim of this charter is to build trust between the community of taxpayers and the taxing administration.
The information contained herein is of a general nature and is not intended to address the circumstances of any person or entity. Although we endeavor to provide accurate and timely information, there is no guarantee that such information is accurate as of the date it received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the situation.