E-Assessment For All Taxpayers As Modi Government Amends Income Tax Act

The government has announced the introduction of e-assessment for all taxpayers by amending the Income-tax Act. This system of e-assessment will almost eliminate the person to person interaction between the officials of Tax department and taxpayers.

During his budget speech in the Parliament yesterday (1 February), Union Finance Minister Arun Jaitley said, "We had introduced e-assessment in 2016 on a pilot basis and in 2017, extended it to 102 cities with the objective of reducing the interface between the department and the taxpayers. With the experience gained so far, we are now ready to roll out the E-assessment across the country, which will transform the age-old assessment procedure of the income tax department and the manner in which they interact with taxpayers and other stakeholders. Accordingly, I propose to amend the Income-tax Act to notify a new scheme for assessment where the assessment will be done in an electronic mode which will almost eliminate person to person contact leading to greater efficiency and transparency”.

Under the proposed jurisdiction-free assessment regime, a taxpayer located in Chennai will be assessed by tax officer selected by the online allocation software of the tax department and could be located in any other part of the country. This assessment mechanism can potentially reduce the scope for corruption and use of discretion by the tax officers. It will certainly go a long way in reducing the opportunities for harassment of taxpayers during in-person interactions.

As per the explanatory memorandum to the Finance Bill, this new scheme, by combining remote online e-assessment and team-based assessment, will impart greater transparency and accountability by eliminating the interface between the Assessing Officer and the assesses.

Addressing a joint conference of direct and indirect tax officials last year, Prime Minister Narendra Modi had made a strong case to keep human interface to a minimum in the tax administration's dealings. He had asked for a boost to be given to e-assessment and anonymity of proceedings using technology, so that vested interests do not impede the due course of law. He had also urged tax officials to leverage data analytics to track undeclared wealth and fix concrete targets for improving tax administration by 2022.

The CBDT had constituted an internal working group to prepare a roadmap for the proposal of a jurisdiction-free tax assessment system and e-scrutiny of taxpayers.

Writing in the Mint, Manish Sabharwal, Chairman of staffing firm Tranleade, observed that "The e-assessment proposal for income tax is not only the first move towards paperless, cashless and presenceless but is a solid intervention in preventing companies and chartered accountants being ATMs for tax authorities."