Centre's faceless e-assessment promising, but the procedures still need clarity
NEW DELHI: As announced in the Union Budget 2019, the Central government has notified the e-assessment scheme for income-tax returns last week.
While it is not clear at this stage which assessment years will come under the ambit of the scheme, tax experts have largely welcomed the move, observing that it would significantly reduce cases of harassment by the taxmen.
So how will this scheme work? The government’s gazette notification last week makes clear that all communication between the income-tax department and the taxpayer whose returns are being scrutinised will be conducted online, through the taxpayer’s registered email address.
At no point is the taxpayer required to visit his assessing officer or the tax office during any stage, with an option for video conferencing available in cases where a personal hearing is required, either initiated by the taxpayer or the department.
Under the scheme, the Central Board of Direct Taxes (CBDT) is to set up a central National E-assessment Centre (NAC) and several Regional E-assessment Centres (RAC). Apart from these nodal entities, there are four other units that are being formed for specific tasks: An assessment unit, a verification unit, technical unit and review unit. All these will conduct the process as follows:
i) NAC will process returns and, in cases where needed, serve notice to the taxpayer detailing issues that are to be taken up for assessment.
ii) The taxpayer has 15 days to respond to notice via the registered email account
iii) NAC will assign the case to any RAC through an automated allocation process
iv) Respective RAC will review the case and send a draft assessment order to NAC
v) NAC will finalise the order, or provide taxpayer opportunity to be heard, or send it for further review with another assessment unit
vi) Once the assessment is complete, the case will be forwarded to jurisdictional I-T officer to recover tax demand or disburse refund, as required
Tax experts say that this is a progressive step that will help ease the problem of tax harassment, but much depends on how it will be implemented. Nangia Advisors (Anderson Global) says that the approach would “save time for all stakeholders and bring in due transparency in the assessment proceedings”.
However, the firm’s managing partner Rakesh Nangia says that while the idea of e-assessments is, in principle, an outstanding one, “the administrative systems and procedures need to be developed to ensure that it does not result in an uncalled for injustice to the taxpayers”.
PwC India’s corporate and international tax partner Frank D’Souza also notes that the process will need to evolve over time and get more refined. “For example, the process does not appear to envisage
cases where the taxpayer has the right to apply to the dispute resolution panel,” he noted.
Others also note that clarity is still required on several other issues, including assessment years covered by the scheme, risk-management strategies and the terms of reference to the administrative units that are being created to facilitate the whole process.