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Income tax department reform

Dreaded till recently by everyone, the Income Tax Department officials now appear to be heading towards a strict discipline in their operation under a constant watch of Prime Minister Narendra Modi.
Though it has been apparent in the last few months that the Income-Tax Department has been taking steps which indicated that the days of high-handedness in picking up cases and assessment orders which were unlikely to stand the legal scrutiny may soon be a thing of the past, the whole exercise nevertheless appeared to be a part of the reform exercise of the Central Board of Direct Taxes.
But, it is clear now, who is the driving force here.
Inaugurating the Delhi Economics Conclave, organized by the finance ministry, PM Modi said: “I have asked the Income-Tax Department to move to a system where not only returns but also scrutiny is done without having to go to the office. Queries could be raised and answered online or by email. There should be a visible electronic trail of what is pending with whom, where, and for how long. This is being piloted in five big cities”.
This move may appear a simple one, but it will reduce harassment of the taxpayers to a large extent. In fact, it is also a cost-effective way of handling an exercise that is more of a deterrent than a revenue-yielding one.
But, the real change that can take the sting out of the tax terror is this. The prime minister said, “I have also instructed that the performance appraisal system, for Income-Tax Officers be changed. The appraisal should reflect, whether or not the officer’s orders and assessments have been upheld on appeal. This will deter corruption and also motivate officers to pass correct orders”.
Clearly, going ahead, one of the critical elements for getting a promotion will be the success rate of the concerned officials’ orders and assessments in appeal.
The good part is that the department is now well equipped to handle these challenges with increasing digitization – 85% of the income tax returns are filed electronically and 40 lakh taxpayers have already got their returns e-verified through Aadhaar this year.
With this, the department has also started interacting with the taxpayers through emails in a big way already.
It is true that many of these steps are part of the overall transformation agenda of the department which started during the UPA regime, but PM Modi has clearly assumed the driver’s seat and has put it in top gear now.

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