Steps to reduce interaction between taxpayer and Income Tax Department

The Minister of State Shri Pankaj Chaudhary in the Ministry of Finance in a written reply to a question raised in Lok Sabha said that various Steps have been taken to reduce interaction between taxpayers and the Income Tax Department.

The Minister Dr. K. Laxman asked the following questions in Lok Sabha:

Will the Minister of FINANCE be pleased to state –

(a) whether any steps have been taken to reduce interaction between a taxpayer and income tax department while making tax assessment, if so, details thereof;

(b) the steps taken to utilize technology to reduce the problems faced by taxpayers;

(c) how the hardships faced by taxpayers due to long pending litigation can be reduced;

(d) whether any steps have been taken to reduce the interaction between the taxpayers and appellate officers while disposing of such pending appeals, if so, the details thereof;

(e) whether the Government has provided any tax incentives to promote cooperatives; and

(f) if so, the details thereof?

Replied by Minister of State Shri Pankaj Chaudhary:

(a) Section 143B of the Income-tax Act of 1961 (the Act) provides for Faceless Assessment for the purposes of assessing the assessee’s total income or loss in order to increase efficiency, transparency, and accountability by removing the interface between the Assessing Officer and the assessee in the course of proceedings to the extent technologically feasible, optimizing the utilization of resources through economies of scale and functional specialization, and introducing faceless assessments.

(b) The Department has taken multiple steps to utilize technology over the years to reduce the problems faced by the taxpayers. Some of the major steps taken are as under:

(i) AIS Module: Information about a specific taxpayer is collected from multiple sources and made available to the taxpayer through the AIS portal. This provides taxpayers with a better view of their financial information, which aids in the filing of their ITRs in a right and holistically accurate manner. Furthermore, AIS allows the taxpayer to correct any improperly provided information. This lowers the likelihood of litigation and encourages taxpayers to comply voluntarily.

(ii) Pre-filling of ITR: To make compliance easier for taxpayers, a significant percentage of the data for ITRs is prefilled with data relevant to the taxpayer’s profile, salary, interest, dividend, tax payment including TDS-related information, brought forward losses, MAT credit, and so on. This facility is heavily used by taxpayers, resulting in smoother and faster ITR filing.

(iii) E-payment of Tax -TIN 2.0: A new module for e-payment of taxes, TIN 2.0, on the e-filing portal, has offered taxpayers a broader manner of tax payment, including payment via UPI. This software has also enabled real-time credit of taxes to taxpayer accounts, allowing for faster ITR filing. Furthermore, it has resulted in reimbursements being credited to taxpayers’ bank accounts significantly faster.

(iv) E-filing portal: In the field of e-filing, the department has made available wizard-based ITR filing, which assists taxpayers in filing tax returns more smoothly. Aside from online filing, a taxpayer can file ITR utilizing offline ITR utilities and third-party software. A mobile app was also introduced to help taxpayers file their returns and receive important updates from their smartphones, and ‘How to do’ videos covering the various features in the e-filing portal were created to educate users about the latest changes in the forms and services.

(v) National Website of Income Tax: The Department has launched a new National Income Tax website in 2023. This website offers a comprehensive resource of tax and related information. It provides access to Direct Tax laws as well as various other related Acts, Rules, Income Tax Circulars, and Notifications, all of which are cross-referenced and hyperlinked. The website also includes a ‘Taxpayer Services Module’ with numerous tax tools to help taxpayers file their income tax returns.

(vi) Proactive Helpdesk to assist taxpayers: The e-filing Helpdesk team worked extended business hours and 24 hours a day, seven days a week, especially during the peak filing season. During the busy filing season, the helpdesk crew is aggressive in assisting taxpayers. Taxpayers received assistance from the helpdesk via inbound and outbound calls, live chats, webex, and co-browsing sessions. The Helpdesk team also assisted in the resolution of queries received on the Department’s Twitter handle using Online Response Management (ORM), by proactively reaching out to taxpayers/ stakeholders and supporting them with various difficulties in near real-time. This vastly improved taxpayers’ experience.

(vii) E-Campaigns: Periodically, specific campaigns on various acts required of taxpayers for compliance were launched by banner, SMS, emails, and so on. Campaigns for e-verification, integrating Aadhar with PAN, revalidation of bank accounts, and handholding via webinars, among other things, were highly appreciated.

(viii) PAN Module: Apart from physical centers, the PAN module has two Service Providers: Protean eGov Technologies Limited and UTIITSL, both of which have specialized online platforms for allotment and correction of PAN card applications. The e-filing portal is also used to provide Aadhaar-based instant PANs. During the process of PAN allotment, information such as application status, dispatch status, and so on is distributed through dedicated portals of the service providers. Furthermore, to simplify PAN-aadhaar linkage, a biometric center for mismatch instances has been enabled to address any challenges encountered by the taxpayer.

(ix) Grievance Redressal Mechanism: The Department has created its own ‘Grievance Redressal Mechanism,’ which is an online platform for filing grievances (e-nivaran). Grievances are handled by a specialized team and are tracked to ensure that they are resolved on time.

(x) Demand Management Facilitation Center (DFC): The Income Tax Department has established a Demand Management Facilitation Center (DFC) in Mysuru, Karnataka. The DFC’s goal is to make it easier for taxpayers to resolve outstanding obligations. This is accomplished by calls made to the taxpayer on a predetermined date and time to assist the taxpayer in reducing their demands through correction.

(c) (i) The Central Action Plan for the financial year 2023-2024 has been redesigned to focus on disposing of old appeals by the Commissioner of Income Tax (Appeals/Appeals Unit). In this context, CsIT (A/AU) has been allocated particular targets for the resolution of long-pending appeals.

(ii) Guidelines for priority disposition have been developed, and in the event of actual hardship, appeals may be considered for out-of-turn/priority disposition at the request of the appellant.

(iii) 100 posts of Addl./Jt. CsIT(Appeals) has been created to handle certain types of appeals, such as those filed against assessment orders issued before 13.08.2020 with a disputed demand of less than or equivalent to 10 lakhs.

(iv) Except for appeals pertaining to central and international charges, all appeals are adjudicated in a faceless manner under the Faceless Appeal Scheme (FAS). Faceless Taxation, which includes the Faceless Appeal plan, is one of India’s largest Direct Tax Reforms and the flagship plan of e-governance built on the idea of limiting physical touch between taxpayers and adjudicating personnel. FAS 2020 was announced on September 25, 2020, and was later amended to FAS 2021, which was released on December 28, 2021.

The Faceless Appeal Scheme, which tries to exploit developments in information technology, prioritizes efficiency, transparency, and accountability.

The National Faceless Appeals Centre (NFAC) was established to administer the plan and facilitate the centralized conduct of faceless appeal hearings, including the random and automatic distribution of appeals for disposition to a specific appeal unit.

The entire appeal procedure (allocation of appeal, communication of notice, submission and hearing, and communication of appellate order) is carried out in a faceless manner. All notices, letters, and orders are only issued electronically and with a unique Document Identification Number (DIN).

With no human interaction and no need to visit the Income Tax Office, the appellant must submit all responses electronically exclusively, via the e-filing platform.

(e) and (f): Finance Act, 2020 carried out the following amendments in the Act to provide benefits to the Cooperative Societies-

(i) Section 115BAD was added to the Act to offer a lower tax rate of 22% for resident co-operative societies beginning in AY 2021-22.

(ii) Section 115JC of the Act has been amended to provide that the provisions relating to Alternate Minimum Tax (AMT) shall not apply to any co-operative society that has exercised the option referred to in section 115BAD of the Act beginning with the financial year 2021-22.

(iii) Section 115JD of the Act was changed to ensure that the requirements pertaining to the carry forward and set off of AMT credit, if any, shall not apply to any co-operative society that has exercised the option referred to in section 115BAD of the Act beginning with AY 2021-22.

Finance Act, 2022 carried out the following amendments in the Act to provide benefits to the Cooperative Societies:

(i) Section 115JC of the Act was amended so as to provide for the alternate minimum tax (AMT) payable by cooperative societies at a lower rate of 15 percent.

Finance Act, 2023 carried out the following amendments in the Act to provide benefits to the Cooperative Societies:

(i) Section 115BAE was added to the Act to provide benefit of a lower tax rate of 15% to new co-operatives that commence manufacturing activities till March 31, 2024.

(ii) Section 155 had been changed to allow sugar co-operatives to claim payments paid to sugarcane producers prior to the assessment year 2016-17 as expenditure. Section 154 of the Act has been amended as a result.

(iii) Section 269SS had been amended to provide a higher limit of Rs. 2 lakh per member for:

(a) Cash deposits in Primary Agriculture Co-operative Societies (PACS) and Primary Co-operative Agriculture and Rural Development Banks (PCARDBs).

(b) Cash loans obtained from Primary Agriculture Cooperative Societies (PACS) and Primary Co-operative Agriculture and Rural Development Banks (PCARDBs).

(iv) Section 269T had been amended to provide a higher limit of Rs. 2 lakh per member for:

(a) Primary Agriculture Co-operative Societies (PACS) and Primary Co-operative Agriculture and Rural Development Banks (PCARDBs) made cash deposits.

(b) Loans to Primary Agriculture Co-operative Societies (PACS) and Primary Co-operative Agriculture and Rural Development Banks (PCARDBs) must be repaid in cash.

(v) Section 194N was amended to provide that TDS at the rate of 2% on cash withdrawals in excess of Rs. 3 crore shall apply in the case of cooperative societies.