What is faceless appeal, taxpayers Charter, Faceless assessment, SFT : Here is what Income Tax filers must know

What is faceless appeal, taxpayers Charter, Faceless assessment, SFT : Here is what Income Tax filers must know

On August 13, 2020, the Prime Minister launched a platform for ‘Transparent Taxation- Honoring the Honest.’ The platform comprises three reforms: faceless assessment, faceless appeals and the Taxpayers’ Charter. While faceless assessment and taxpayers’ charter are effective from August 13, 2020, the faceless appeal services will come into effect from September 25, 2020.

Faceless assessment and faceless appeals aim to eliminate physical interface between taxpayers and the tax authorities, thereby imparting greater efficiency and transparency to the assessment and appeal process.

Faceless assessment

Under faceless assessment, a central computer picks up tax returns for scrutiny based on risk parameters and mismatch and then allots them randomly to a team of officers.

This allocation is reviewed by officers at another randomly selected location and only if concurred, a notice is sent by the centralized computer system. All such notices need to be responded to electronically.

Income tax surveys to collect information for scrutiny assessment will be undertaken only by the investigation wing.

The previous regime allowed taxmen from inspector onwards to initiate the survey with approval from the joint commissioner of income tax.

Exceptions will be made in cases of serious fraud, major tax evasion, sensitive and search matters, international tax charges, Black Money Act and Benami property.

Faceless appeal

The Central Board of Direct Taxes (CBDT), which administers personal income tax and corporate tax, will launch faceless appeals beginning 25 September (incidentally the birth anniversary of Deen Dayal Upadhyay) as part of the process to reduce physical interface between tax officers and taxpayers.

Among its key features: Appeals will be allotted at random to officers, taxpayers will not need to visit offices or meet any officials, the identities of the officers deciding the appeal will remain unknown, the appellate decision will be team-based and reviewed.

Modi said the faceless appeal system, which comes into force on 25 September would give the taxpayers the feeling of 'fairness and fearlessness'. "Effort is to make tax system seamless, painless and faceless... honest taxpayer plays an important role in the development of the nation," he said.

Asking people to pay due taxes, Modi said while it is the responsibility of tax officers to deal with taxpayers with dignity, people should also consider paying taxes their responsibility.

He added that fundamental reforms are needed and that India is among the nations with the lowest corporate tax rates.

FACELESS ASSESSMENT AND APPEAL OBJECTIVES

Imparting greater efficiency, transparency and accountability Eliminating physical interface between the taxpayer and tax officers

FACELESS ASSESSMENT AND APPEAL FEATURES

Selection only through system using data analytics and AI
Dynamic Jurisdiction — abolition of territorial jurisdiction
Automated random allocation of cases.
Central issuance of notices with Document Identification No. (DIN)
No physical interface, No need to visit income tax office
Team-based assessments and Tearm.based review
Draft assessment order in one city, review in another city and finalisation in third city
Objective fair and just order
2/3rd of the manpower is utilised for faceless and balance for other functions

Taxpayers’ Charter

Taxpayer Charter has been announced which was promised in the budget speech of 2020. It makes following commitments to taxpayers and expectations from the taxpayers-

Income Tax Department's commitment to taxpayers:

To provide fair, courteous, and reasonable treatment,
To treat taxpayers as honest,
To provide mechanism for appeal and review,
To provide complete and accurate information,
To provide timely decisions,
To collect correct amount of tax,
To respect privacy of taxpayers,
To maintain confidentiality,
To hold its authorities accountable,
To enable representative of choice,
To provide mechanism to lodge complaint,
To provide a fair & just system,
To publish service standards & report periodically, and
To reduce cost of compliance.

Income Tax Department's expectations from taxpayers:

Be honest and compliant – Taxpayers are expected to honestly disclose full information and fulfil his compliance obligations.
Be informed – Taxpayers are expected to be aware of their compliance obligations under tax law and seek help of department if needed.
Keep accurate records - Taxpayers are expected to keep accurate records required as per law.
Know what the representative does on his behalf – Taxpayers are expected to know what information and submissions are made by his authorised representative.
Respond in time – Taxpayers are expected to make submissions as per tax law in timely manner.
Pay in time – Taxpayers are expected to pay amounts due as per law in a timely manner.

Statement of Financial Transactions (SFT)

The government has proposed to widen the scope of reporting in the Statement of Financial Transactions (SFT) to include various transactions carried out by individuals in their day-to-day activities via a tweet issued on August 13, 2020. SFT is a statement filed by specified persons with the government to report certain transactions over specified thresholds that they have had with individuals.

Payment of educational fee /donations above Rs. 1. lakh p.a
Electricity consumption above lakh Rs. 1. lakh p.a
Domestic business class air travel/foreign travel
Payment to hotels above Rs. 20,000
Purchase of jewellery, white goods, painting, marble, etc. above Rs. 1 lakh
Deposit/Credits in current account above Rs. 50 lakh
Deposit/credits in non-current account above Rs. 25 lakh
Payment of property tax above Rs. 20,000 p.a.
Life Insurance premium above Rs. 50,000
Health insurance premium above Rs. 20,000

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