Taxpayers' Charter sends right message to investors on regulation: Experts

The Taxpayers' Charter will send the right message to the global investor community regarding regulatory certainty in India, while faceless tax assessment and appeals will ease the compliance burden and accord fair treatment to taxpayers, experts said.

The Taxpayers' Charter, unveiled by Prime Minister Narendra Modi on Thursday, provides for the tax department treating every taxpayer as honest unless proven otherwise and guarantees the right to privacy and confidentiality of information.

This is part of 'Transparent Taxation -- Honoring the Honest' platform which has been launched with the key objectives of bringing in transparency, efficiency and accountability. It would focus on faceless assessment and appeals, apart from the Taxpayers' Charter.

Deloitte India Partner Divya Baweja said, "While the Income Tax Department is expected to be fair, courteous and reasonable, similar obligation is casted on the taxpayer to be honest and compliant. These are the steps in the right direction and in line with the commitment given by the government to ease compliance and accord fair and just treatment to the taxpayers."

Nangia Andersen LLP Partner Aravind Srivatsan said "the cornerstone of today's announcement by PM is the actionable step towards introduction of Taxpayers' Charter... Seen in the context one after other the government is honouring its promise and bringing in Taxpayers' Charter will send a right note to the global investor community to look at India market landscape with its regulatory certainty."

Experts said the push to ensure honest taxpayers have certainty and a non-adversarial or soft-touch regime would help put energy and effort of businesses into operations.

"The charter will boost the government - taxpayer trust quotient, reduce arbitrary and complaints of harassment and, increase efficiency of the tax department. Making tax officers accountable for the actions and performance of tax officers linked to adherence to charter will significantly reduce litigation and promote transparency," Srivatsan said.

JLL CEO and Country Head (India) Ramesh Nair said the tax reforms add strength to the government's efforts of reforming and simplifying the tax system.

"This reform will play a significant role in helping India attract greater interest from institutional investors and ensure holistic improvement in the overall transparency of the business environment," Nair said.

Cyril Amarchand Mangaldas Partner and Head-Taxation S R Patnaik said, "These are significant announcements from an Indian taxation perspective. However, having said this, it is expected that an overhauling of the tax department is also on the way and it is expected that the tax authorities would also ensure their deliveries within time."

DVS Advisors LLP Founder and Managing Partner Divakar Vijayasarathy said launch of the 'Transparent Taxation' platform is part of digitalisation of the functioning of the income tax department undertaken to eradicate corruption, harassment of the taxpayers and reducing litigation by introducing faceless transactions.

"Some part of it is already in practice with most of the notice being issued under e-proceedings. Now the same is being extended to assessment and appeal. This could not have come at a better time, ensuring acceptance from both the taxpayers and the officials and such reform is inevitable to attract foreign capital," he said.

Vijayasarathy said the government is efficiently and effectively using the 'nudge' philosophy in public policy to motivate the population towards the desired objective.

KPMG in India Partner and Head (Corporate and International Tax) Himanshu Parekh said the aspects related to faceless assessments and appeals will ensure that there is no opportunity for personal bias and procedures are conducted in a fair and transparent manner, which will avoid unnecessary controversy and long-drawn litigation, which has been a bane for taxpayers.

"The Prime Minister also emphasised on the need to have simple laws which can be easily understood and adhered to by taxpayers. All these measures will go a long way in ensuring ease of doing business for taxpayers, which will result in better compliance of tax laws and also help augment tax revenues for the government," Parekh said.

EY India National Tax Leader Sudhir Kapadia said the announcements show the government's resolve to resolutely push towards digital channels for interaction with taxpayers with a clear bias towards honesty and transparency.

Along with the far reaching reforms on GST and simplification and rationalisation of income tax provisions, this will go a long way in ensuring 'ease of tax compliance' for honest and law abiding taxpayers, he said.

"As an immediate relief, it would be highly desirable if CBDT instructs release of all pending refunds to companies (without any monetary thresholds) as quite a few companies are left with no choice but to consider approachingcCourts to expedite their refunds in these pandemic induced stressful business environment," Kapadia added.