FACELESS TAX SCHEME

FACELESS TAX SCHEME

Subject : Economy

Context : The government’s faceless tax assessment scheme, an attempt to remove individual tax officials’ discretion and potential harassment for income tax payers, has managed to deliver about 24,000 final orders since its introduction in August 2020.

Concept :

• The government has now passed the Taxation and Other laws (Relaxation and Amendment of certain Provisions) Act, 2020 on September 2020 to incorporate the Faceless Assessment Scheme under the provisions of Income Tax Act, 1961.

Key Features

• The National Faceless Assessment Centre (NFAC) will serve a notice to the taxpayer under section 143(2) of the Act. The taxpayer should file his/her response to the notice within 15 days of receipt of the notice from the NFAC.
• The NFAC will assign the case selected for the purpose of faceless assessment to a specific assessment unit in any one Regional Faceless Assessment Centre (RFAC) through an automated allocation system (AAS).
• After considering the material available on record, the assessment unit will prepare draft assessment order either accepting or modifying the returned income of the taxpayer and send it to NFAC along with the details of penalty proceedings to be initiated (if any).
• The NFAC will examine the draft assessment order in accordance with the risk management strategy by way of an automated examination tool.
• NFAC will then finalise the assessment and serve the order to the tax payer or issue a show cause notice to the taxpayer. NFAC can even assign the draft order to the review unit through AAS if required.

Significance

• Taxpayer has to comply with assessment without requirement for physical attendance in the offices of the Income tax Department.
• Faceless assessment is expected bring positive changes to the assessment system, thereby saving travel time and cost for the taxpayer.
• Being environment friendly as there will not be any submission made physically, review by more than one assessment unit for a single assessment making the entire assessment process more transparent and objective.