Faceless Tax Scheme

The Central Government introduced the Faceless Assessment Scheme to provide greater transparency, efficiency and accountability in Income Tax assessments. 

All provisions introduced under Faceless Assessment, under the Income Tax Act, 1961, are introduced to-

(a) Eliminate the interface between the Assessing Officer and the assessee during the course of proceedings, to the extent that is technologically feasible;

(b) Optimise the utilisation of resources through the economies of scale and functional specialisation; and

(c) introduce a team-based determination of arm’s length price with dynamic jurisdiction.

Significance of Faceless Tax Scheme :

  • The government’s faceless tax assessment scheme, an attempt to remove individual tax officials’ discretion and potential harassment for income tax payers, has managed to deliver about 24,000 final orders since its introduction in August 2020.
  • Indicating that the scheme was up and running robustly, many as 800 cases have also concluded the faceless appeals process since it was implemented on September 25, 2020.
  • “The system has now stabilised. Even though the last date for passing orders in scrutiny cases is March 31, we have already passed final orders more than 24,000 cases.
  • The faceless appeals systems are now in place and after hearing parties, more than 800 cases have seen orders being passed through the faceless manner,” he
  • “The scheme allows for appropriate cases where a certain hearing is necessary, so then after following protocols, a hearing is given. 
  • The very fact that more than 24,000 final orders have been passed through the faceless system demonstrates that the system has stabilized.”

Challenges:

  • “In the faceless regime, the main objective is to remove physical interaction as much as possible, and hence, the taxpayers may not have the opportunity to explain (in person) business-related complexities and explain various positions they have taken while filing their income-tax returns. 
  • These facilities are available in the existing system,” PwC India had noted last month in a report titled ‘Faceless Interface — a paradigm shift in administration of the income tax law’.
  • Advising taxpayers to ensure that appropriate documents with factual matrix are available and filed, and their written submissions are comprehensive

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