New Transparent Taxation Scheme: Everything You Need To Know

On 13 August 2020 (Thursday), PM Narendra Modi launched the platform for "Transparent Taxation - Honoring the honest" in India.

The inauguration started with the Minister of Finance, Nirmala Sitharaman giving a brief speech on the topic.

The Minister of Finance mentions the Prime Minister's visions:

1. To empower the taxpayers,

2. To provide a transparent system, and

3. To honour the honest taxpayer.

These visions are to be fulfilled by this new platform that promises a transparent, efficient, and accountable tax administration.

Check Out: CA Intermediate Income Tax Classes Nov 2020

What does this mean to the taxpayers in the country?

This platform is meant to:

• Ease the compliance burden
• Bring in fair, objective, and a just system
• eliminate the physical interface between the Income Tax Department and the taxpayers
• Provide certainty of information to an extent

Remarkable Steps taken by the Income Tax Department in the past year

In a period of one whole year,

• The Income Tax Department has brought down the Corporate Tax from 30% to 22% for all the manufacturing existing units.
• It has also brought down the Corporate Tax to 15% for new manufacturing companies.
• The Dividend Distribution Tax has been removed by the Income Tax Department.
• The Personal Income Tax structure has been simplified.
• Income Tax Department also provided Document Identification Number for accountability which provides traceability and authenticity.
• Pre-filled forms have been provided to the taxpayers.
• Not only they have provided the pre-filled forms, but also they have explained how to use them.
• Digital transactions and electronic modes of payment have taken place.
• During the pandemic, the Income Tax Department has provided relief by extending statutory timelines for filing of return.

New Tax Reforms introduced

1. Faceless assessment
2. Faceless appeal
3. Taxpayers' charter

The Prime Minister mentions the date of the reforms coming into force.

Faceless Assessment and Taxpayers' Charter came into force on 13 August 2020 while Faceless Appeal is to come into force from 25 September 2020 on the auspicious event of Deendayal Upadhyaya's birth anniversary.

Key Highlights from the PM's Speech

The PM mentions that in the last 6 years, our focus has been:

• Banking the unbanked
• Securing the unsecured
• Funding the unfunded

And thus, a new journey is now starting of Honoring the Honest.

Honoring the Honest is the basic theme of this platform that aims to reduce Government intervention.

It aims to shift from the process and power-centric approach to people-centric and public-friendly approach.

Reasons behind the positive changes in the past few years

PM Modi says that there are 4 major reasons due to which India has witnessed so many positive changes over a short span of 6-7 years:

1. Policy-driven Government

When the policy is clear, we witness less grey area and less discretion in the country.

2. Trust in the common people's honesty

Putting faith in common people's honesty gives the common people a sense of responsibility and accountability.

3. Introduction of more technology in the Government sector

Changing according to the changing environment and accepting the new technologies reduced labour and increased efficiency.

4. Bureaucracy being rewarded

In the past few years, efficiency, integrity, and sensitivity are among the traits that are being particularly rewarded.

What does the reform mean to us?

To us, reform means that it be - 

• principle-based
• wholesome
• holistic
• foundation for another reform
• continuous

Why was Fundamental and Structural Reform needed in India?

Our earlier reforms were originally formed under the rule of the British which gradually evolved according to the needs of the people. Even after independence, we were struggling with the old reforms which held no relevance in the new world.

Therefore, it was much needed that we introduce Fundamental and Structural Reforms in our developing country.

With the evolving nature of our surroundings, it became important that our Income Tax System be:

• Seamless
• Painless
• Faceless

What does the Taxpayers' Charter aim to bring to the country?

We are no strangers to the behaviours of the Income Tax Department towards the common people. We, as the common masses, can't survive in fear in a democratic country. The policies are formed for the benefit of common people. And thus, they are not to be looked down upon.

Therefore, we are now introduced with benefits and security.

The Taxpayers' Charter aims to bring the elements of benefit and security so that the common people can live freely in a free nation.

Now, a taxpayer gets a proper, polite, and appropriate behaviour from the Income Tax Department.

The main theme is not to look at people with suspicion irrespective of whether they are actually guilty or not.

The PM says that even if the Income Tax Department has some reasons to believe that a particular person might be involved in some suspicious shenanigans, they are to carry out all the procedures respectfully.

PM Modi believes that this is a two-way process where the taxpayers are supposed to pay their taxes on time and the tax-collectors are supposed to accept that respectfully and honourably.

One can't function properly without the co-operation from the other.

Therefore, when the Government is ready to provide us with all the benefits, the least we can do is honestly pay our taxes on time.

The whole theme is to give all due respect and honour to the honest.

We are moving to a world that functions not on punishing the guilty, but on rewarding the deserving ones.

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