India is leading by example with its faceless E-assessment system for income tax

Context

India is one of the few countries in the world to adopt the E-assessment and is now leading the world through the reforms in the indirect taxes.

About the faceless E-assessment system

• Faceless Assessment is being initiated to remove the human interface between the taxpayer and the Income Tax (I-T) Department.
• Features of the system
  • Selection of a tax payer only through system using data analytics and AI
  • Abolition of territorial jurisdiction
  • Automated random allocation of cases
  • Central issuance of notices with Document Identification No. (DIN)
  • No physical interface, no need to visit the income tax office
  • Team-based assessments and team-based review
  • Draft assessment order in one city, review in another city and finalisation in third city.

Exceptions: Cases relating to:

• Serious frauds, major tax evasion, sensitive & search matters
• International tax
• Black Money Act and Benami Property

Significance of the scheme

• The system comes at a very apt time, wherein the digital nature of the process ensures continuity in period of the Covid-19 pandemic.
• India will be one of the few countries to have faceless assessment
• If it gets implemented successfully, India can be an example for the rest of the world in leveraging technology for curbing undesirable practices and offering better services to its tax-paying citizens.
• The scheme is expected to result in better quality of assessment orders while reducing potential harassment to taxpayers.