Tax Transparency Reforms 2020: Decoding for an Indian Taxpayer ?

This document covers

1. Our assessment on what's coming ?
2. Proposed measures for Widening the Tax Base
3. Faceless Assessment
4. Direct Tax Reforms

1. Our assessment on what's coming ?

The measures put forward are unprecedented to capture most data to raise the awareness and implement mandatory compliance measures and is particularly impacting the small business communities where the tax filing and compliance is mediocre at its best.

These provisions, if rightly implemented, bring greater transparency, compliance and bring more people in to the formal economy. Truly a commendable initiative to raise the honest taxpayer confidence in India.

What we all need is reduced bureaucracy, middlemen in the tax system, % businesses, and increasing the overall compliance to show case the true power of real Indian economy.

2. Proposed measures for Widening the Tax Base

~2 Crore new income tax filings processed during last two years, still the Indian Tax filings relative to its total population is way lower than many OECD nations. To widen the tax base and improve compliance & transparency, many measures proposed and being implemented with immediate effect.

NEW: High Value Transactions that are to be captured by the Income Tax Department and the minimum threshold for such.

OLD: Other popular High Value Transactions that are already being tracked under SFT are

Other Provisions

1. Provision for the Deduction / Collection of tax at higher rates for no-filers of tax returns
2. Provision for making Tax Returns Compulsory for taxpayers
1. Whose bank transactions above Rs. 30 Lakh
2. All professionals, businesses having turnover above Rs. 50 Lakh
3. All whose payment of rent is above Rs. 40,000 per month

3. Faceless Assessment

To eliminate corruption, bring transparency, build trust among honest taxpayers both individuals and businesses alike, started the new Faceless, nameless, painless, and seamless income tax assessment, appeals.

1. Officer selection is only through a computer system using data analytics & artificial intelligence (AI)
2. Abolition of territorial jurisdiction to bring confidence in dealing with the IT Office / Systems in general.
3. Completely automated random allocation of cases to officers
4. Central issuance of notices with Document Identification Number (DIN)
5. Removal of physical interface makes no visits to Income Tax offices
6. Team-based assessments and Team-based reviews to reduce decision making power to just one officer.
7. Draft assessment order in one city, review in another city & finalisation in a third city gives complete transparency in handling the cases.

1. Serious frauds, Major Tax Evasion, Sensitive, Search, Seizures related matters
2. International tax
3. Black Money Act & Benami Property

4. Direct Tax Reforms

To curb tax evasion and widening the tax base, government taken additional tax reforms part under this initiative

1. Continue to encourage the digital transactions in all respects
2. Expansion of the Scope of TDS / TCS for various transactions with certain threshold limits
3. Form 26AS amended to provide information electronically to the taxpayers
   
   
4. Enable Benami Law (of 2016) to confiscate the Benami properties & the prosecution of benamidars
5. Revitalise the Black Money Act (of 2015) to curb black money stashed abroad
6. Equalisation Levy of 2% extended under The Finance Act of 2020
7. To bring efficiencies and reducing the cost handle the appeals, raised the monetary limit for filing of departmental appeal raised from
   
   
   1. Rs. 20 Lakh to 50 Lakh before ITAT
   2. Rs. 50 Lakh to l Crore before High Court
   3. Rs. 1 Crore to 2 Crore before the Supreme Court
8. ITR form now contains prefilled details of certain incomes
9. Hassle-free assessment procedure, exemptions from Angel-tax, constitution Of dedicated start-up cell