In the past 6 years, the Modi government has come up with several direct tax reforms to reduce the tax burden on its citizens. The biggest one was when the government reduced the corporate tax from 30% to 22%. Other major reforms were also implemented like ‘Vivad se Vishwas Act’ to settle tax disputes. They abolished the dividend tax. They extended timelines for filing returns as also releasing refunds expeditiously to increase liquidity in the hands of taxpayers.
But still today, there are many gaps in the tax system. For instance, individuals dread the prospect of dealing with the Income Tax department. People fear the IT department because of their harassment, corruption and inefficiencies. And this has caught the attention of the government. It has been focussing on simplification of direct tax laws and increasing transparency in communication. A major step in this regard was the introduction of Document Identification Number (DIN) wherein every communication of the department would carry a computer-generated a unique document identification number.
Today, it introduced another reform to build upon the DIN reform. PM Modi launched the ‘Transparent Taxation, Honoring the Honest’ platform to further its initiative to reform direct taxes in India. The platform is aimed at bringing more transparency in official communication through the newly-introduced Document Identification Number. The platform will have faceless assessments, faceless appeal and taxpayer charter. This will make the process fair and improve transparency.
All these previous reforms have started to show results. Baseless scrutiny has reduced as scrutiny cases have reduced 4 times in the last 6 years. The number of people who filed IT returns increased by 2.5 Crore during the same period. Considering we are a country of 130 crore people, there is still a long way to go. But poor practices in IT department discourage honest taxpayers. They are now being dealt with by the government.
All government expenditure is possible only because of the taxes we pay. So it is obvious that the government will try to net in more taxpayers and take steps to discourage tax avoidance. But this reform looks at bringing in transparency in the process and easing the lives of the people who already pay taxes. So honest taxpayers are rewarded with lower bureaucracy and good governance. This will benefit the country in the long term.
Implementation of this reform is a #Teji move although it was long overdue. It signals strong intentions of the government to make the lives of its citizens easier and encourage more people to pay taxes. Looking at the pace of the government, expect more such reforms to come in the future.