Union Finance Secretary Ajay Bhushan Pandey on Friday hinted at the use of Big Data to track major financial transactions, under-reporting of income and tax frauds in the country, even as he assured that the government would make the taxation process fearless and pain-free for honest taxpayers.
“We are collecting many information about taxpayers without putting pressure on the assesses; be it about major case withdrawals, property transactions, large purchases, stock transactions or foreign travel. We are getting data not only domestically, but also from 98 other countries with whom we have tax treaties. These will help streamline the tax assessment process,” he said in a webinar on ‘Faceless Taxation’ jointly organised by ETMarkets and Ficci on Friday.
Dr Pandey said tax authorities are scrutinising far less percentage of tax cases now. “Only about 2 lakh assesses were selected for scrutiny out of about 7 crore tax returns that were filed. This shows the government has a lot of trust on taxpayers. Such scrutiny is going to happen only where there are large discrepancies,” he said.
The new system comes into place from September 25.
Dr Pandey, a 1984-batch Indian Administrative Service (IAS) officer took over as Finance Secretary this March. In his previous stints, Dr Pandey has served as the revenue secretary, CEO of UIDAI and chairman of the GST Network.
He said the selection of cases for assessment and scrutiny is no longer being done manually. “Certain risk parameters will be assigned to all tax return filings, basis which cases will be picked up electronically,” he said.
“The new system will eliminate harassment and corruption that people used to complain about in the tax administration earlier. The entire process will now be managed from a back office system, eliminating human interfacing, and thereby, removing the element of discretion,” Dr Pandey said.
The Prime Minister on August 13 unveiled the landmark tax reforms to facilitate Faceless Assessment and Faceless Appeal and introduced for the first time a Taxpayers’ Charter that lists out the rights and responsibilities of the taxpayer.
While the Faceless Assessment process eliminates human interfacing, the Faceless Appeals system will facilitate appeals that will be allotted randomly to any officer anywhere in the country, and whose identity will remain anonymous. Decisions on such appeals will be team-based.
“The government’s aim is to become a facilitator and not someone trying to extort taxpayers,” Dr Pandey said. He said the government favours not tinkering with the tax system too often, and efforts have been made recently to transform what used to be a colonial legacy of territorial tax administration into a universal one.
“The government has brought in a lot of reforms in direct and indirect tax systems over the past few years. Corporate tax rates have been brought down significantly to one of the lowest in the world. The common thread in all this has been tax reduction and making the system competitive. Along with these tax cuts, there have also been reforms in processes. We need to remove the element of fear from the process,” he said.
Dr Pandey said the government first started the ‘faceless’ tax assessment process in June-July 2019 and has improved it incrementally over the past year before the Prime Minister announced its nationwide rollout on August 13. “We are looking at it from the point of ease of doing business, and ease of living. When the world around us is going faceless and going digital, our tax system cannot remain archaic,” he said.
“Now we have removed the territorial system and discretion of tax officials. Covid-19 led to better digital adoption in the country, and that sped up the adoption of the faceless system in the tax administration,” he said.
Dr Pandey said the tax department processed some 58,000 tax cases through the faceless system in the last one year, and out of them, 11,000 cases were resolved in a record time.