Tax-friendly regime likely in Budget 2018-19

The Budget might overhaul the income tax administration and assessment system to lower taxpayer harassment and improve efficiency of officers.

The Income Tax Act might be amended to give effect to “jurisdiction-free assessment”, which means that any officer can send a notice to any taxpayer in any jurisdiction electronically.

Assessments would be done through e-mails, eradicating human interface.

“The move is aimed to lower corruption and harassment cases and also improve the department’s efficiency. It is a taxpayer-friendly measure. It is expected to come into effect from the next fiscal year,” said a government official. He explained the Act states the assessing officer would issue a notice for the return on income.

A taxpayer could challenge a notice issued by a computer or another jurisdiction’s official by saying it was not issued by his designated assessing officer. “An amendment in the Act may be needed to saw the notice would be issued by the Income Tax Department.”

The move will lead to speedy resolution of tax cases and reduce pendency rate.

In addition, the tax department is also mulling implementation of ‘functional specialisation’. The functions of a tax officer — such as assessment, verification, raising demand, recovery and passing of orders — would be split. Currently a single officer carries out the entire process for a taxpayer — from assessment, raising demand and passing an order. Overworked If an officer is overworked, another officer based anywhere else can be assigned the assessment or any other function of a taxpayer, according to the proposal.

The income tax department has a steep collection target of ~9.8 lakh crore during 2017-18, a growth of 15.7 per cent year-on-year compared with a growth of 14.3 per cent in the previous fiscal year. Income tax rate on income between ~2.5 lakh and ~5 lakh was cut to 5 per cent from 10 per cent from the current year.

Last week, a group of senior tax officers had met to discuss legal changes to implement jurisdiction-free assessment.