Finance

IT Department to map digital behaviour of taxpayers to create profiles

The income tax department will map the digital behaviour of taxpayers to create their profiles under faceless scrutiny assessment in electronic mode, a senior official said, as all interactions of a taxpayer with the tax authority will be logged.

Faceless assessment will be a complete shift from the earlier practice where taxpayers could sit with the assessing officer and resolve issues at one go, following a single notice of demand, and even seek adjournment for hearings over telephone calls.

“If I give you a requisition for five things, you (taxpayer) respond to one, and take adjournment to respond to the other, that’s assessee behavior that is being mapped, which in the manual days was not being mapped,” Smita Jhingran, chief commissioner of income tax at Regional e-Assessment Centre, Delhi, said on Friday at a webinar organised by industry body FICCI and Dhruva Advisors.

“A lot has changed. Now you’re leaving a digital footprint of everything …,” she said in response to a question.

As part of the changes under the new scheme, penalties will be issued by the National E-Assessment Centre (NeAC) instead of jurisdictional officers, and the option to approach the dispute resolution panel will be open to taxpayers.

“Penalties will be centralized,” said Central Board of Direct Taxes joint secretary Rajesh Bhoot, adding that NeAC will issue standard operating procedures for identifying cases that will need in-person discussion with the jurisdiction officer or via video conferencing.

According to Jhingran, taxpayers will have to be thorough in their responses to notices issued by the tax department, since hiding information or not responding to some points could end up being recorded.

“We now have you (taxpayer) interacting with a person you don’t know, so you (industry) have to be very meticulous in writing out exactly what you want, and that actually works to your advantage,” she said.

The official said quicker response to notices is needed from taxpayers, as sending out a final demand notice has become far more process driven than before. She noted that the department received “very slow” responses to notices issued under the pilot phase, with many having not responded at all.

“The response rate is very very slow… There is a high level of percentage of people not responding… I won’t share the exact percentage, that is because you have to unlearn some old practices,” Jhingran said.

She said assessment of larger cases, or those that require complete scrutiny, will not be bunched up towards the end of the financial year, rather they will start early since the process has become automated with limited time for response from both sides.

Under the pilot phase of the faceless assessment scheme, launched in October 2019, over 58,300 cases were picked, of which over 8,700 have been disposed of. The scheme was launched for the whole country by Prime Minister Narendra Modi on August 14.

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