The process of Structural Reforms going on in the country has touched a new milestone today. A new 21st century tax system ‘Transparent Taxation - Honouring the Honest’ has been launched today.
The platform has major reforms like Faceless Assessment, Faceless Appeal and Taxpayers’ Charter. The Faceless Assessment and Taxpayers' Charter have come into force from today. However, the facility of faceless appeal will be available for citizens across the country from 25th September which marks the birth anniversary of Deen Dayal Upadhyay. Now, even as the tax system is becoming faceless, it is infusing confidence in the taxpayers in terms of fairness and fearlessness.
I congratulate all the taxpayers for the same and I also congratulate all the officers and employees of the Income Tax Department.
In the last 6 years, our focus has been on Banking the Unbanked, Securing the Unsecured and Funding the Unfunded. Today we are embarking upon a new journey i.e. Honoring the Honest. The honest taxpayer of the country plays a huge role in nation building. When the life of an honest taxpayer of the country becomes easy and he moves forward, then the country also develops and moves forward.
The new arrangements and facilities that are starting today, reinforce our commitment towards 'Minimum Government, Maximum Governance'. This is a huge step towards minimising the government interference from the lives of the countrymen.
Today, every law and policy is taken out of the power centric approach and emphasis is given on making it people-centric and public-friendly. This is the new governance model of the New India and the country is getting favourable results from it. Today everyone has realized that short-cuts are not right; it is not right to adopt wrong methods. Now that era is gone. Now the atmosphere in the country is turning such wherein every work is being done keeping duty as paramount.
The question is: how is the change taking place? Is it because of strictness? Is it because of punishment? No; not at all. There are four major reasons for the same.
The first is policy-driven governance. When the policy is clear and transparent, the grey areas become minimized and, therefore, in business, the scope for discretion is reduced.
Secondly: having faith in the honesty of the common man.
Thirdly: large scale use of technology by limiting the human interface in government systems.
Today, technological interface are being used everywhere, be it the government procurement, government tender or delivery of government services.
And fourthly: the qualities of efficiency, integrity and sensitivity are being rewarded in our government machinery and bureaucracy.
There was a time when we used to talk a lot about reforms here. Sometimes some decisions were taken under compulsion, sometimes some decisions were made under pressure, and those were termed as reforms. As a result, we did not get the intended outcomes. Now both this thinking and approach have changed.
For us reform means something which is policy-based and not piecemeal; it should be holistic and one reform must be the basis for another reform or make way for a new reform. And it is not as if we stop after one reform. It is a continuous process. In the last few years more than 1500 archaic laws have been abolished in the country.
India was at number 134 in Ease of Doing Business ranking a few years ago. Today India's ranking is 63. There are many reforms and changes in various rules and laws behind such a big jump in the ranking. Seeing this commitment of India towards reforms, the confidence of foreign investors in India is also increasing continuously. The inflow of record FDI into India even during the Corona pandemic is an example of the same.
Fundamental and Structural Reforms were needed in the tax system of India because our current system was created in the British period and then evolved slowly. After independence, a lot of changes were made here and there, but the character of the system largely remained the same.
As a result, the taxpayer, who is a strong pillar of nation building, who is contributing to lift the country out of poverty, has always been questioned. The notice of income tax became a decree. Many people had to face unnecessary trouble so that a handful of people who had cheated the country could be identified. When the number of tax payers should have been expanded with pride, a system of collusion and connivance emerged.
In this quandary, the black and white money industry also flourished. This system crushed the honest businessmen, the employers, and the aspirations of the youth power of the country instead of encouraging honest business.
Compliance is also difficult where there is complexity. The number of laws should be as less as possible. If the law is transparent, then both the taxpayers as well as the country are happy. This work is being done for some time now. Like, GST has replaced dozens of taxes. Arrangements ranging from filing returns to refunds were made completely online.
The new tax slab system has freed the compulsion of unnecessarily submitting papers and documents. Moreover, the government used to reach the High Court and Supreme Court on disputes above Rs 10 lakh. Now the limit has been raised to up to 1 crore rupees in the High Courts and up to 2 crores rupees in the Supreme Court. Attempts are being made to ensure that most cases are settled out of court through schemes like 'Vivaad se Vishwas'. As a result of this, around 3 lakh cases have been resolved in a very short time.
Besides reducing the complexities of the procedures, tax has also been reduced in the country. Tax is now zero on income of 5 lakh rupees. The tax has also come down in the remaining slabs. We are one of the lowest tax imposing countries in the world in terms of corporate tax.
Our effort is to ensure that our tax system is Seamless, Painless and Faceless. Seamless means that the tax administration should work to solve the problem every taxpayer instead of complicating things. Painless means everything from technology to rules is made simple. Faceless means one should not be concerned about who is the Taxpayer and who is the Tax Officer. These reforms coming into force from today are going to take this thinking forward.
Till now, the tax department of the city where we live used to handle all the things related to taxes. Be it scrutiny, notice, survey or seizure, the Income Tax Department of the same city played the main role of Income Tax Officer. Now this role has ended in a way. Now it has been changed with the help of technology.
Now the scrutiny of cases may be allocated randomly to any officer in any region of the country. For example, the task of investigating a matter related to filing the return of a Mumbai taxpayer will not go to the Mumbai officer; but it is possible that it may go to a faceless team of Chennai. And the order that will come out from there might be reviewed by the team of another city, like Jaipur or Bengaluru. Now what will be the faceless team, who will be included in it, will also be decided randomly! There will also be changes in it every year.
With this system, the taxpayer and the income tax office will not get any chance to get acquainted or influenced. All will work according to their respective obligations. The advantage to the department will be that there will not be unnecessary litigation. Unnecessary energy spent on the transfer-posting can also be avoided. Similarly, besides investigation of tax related cases, the appeal will now be faceless.
The Taxpayers' Charter is also a major step in the country's development journey. For the first time in the history of India, the rights and duties of taxpayers have been codified. India has also joined the few countries which have given this level of respect and protection to taxpayers.
The taxpayer is now assured of fair, courteous and rational behaviour. That is, the income tax department now has to take care of the taxpayer's dignity and sensibility. Now the department has to trust the taxpayer, the department cannot doubt him unnecessarily or without any basis. Even if there is any doubt, the taxpayer is now empowered to make an appeal and ask for a review.
Rights always come with obligations and duties. This charter also contains certain requirements from taxpayers. Paying tax by the taxpayer or imposing tax by the government is not a matter of right, but a responsibility of both the sides. Taxpayers have to pay taxes because the system runs from that and the country can fulfil its duty towards the teeming millions of the country.
With this tax itself, the taxpayer also gets better facilities and infrastructure for progress. At the same time, it is the responsibility of the government to properly utilize every penny paid by the taxpayer. In such a situation, when the taxpayers are getting convenience and security, the country also expects every taxpayer to be more aware of their obligations.
It is also important to understand how the impact of the trust on the countrymen, is seen on the ground. Out of all the tax returns filed in the year 2012-13, there was scrutiny of 0.94%. In the year 2018-19, this figure has come down to 0.26%. That is, the scrutiny of the cases has reduced by almost 4 times. Scrutiny reduced by 4 times itself shows how extensive the change is.
In the last 6 years, India has witnessed a new model of governance developing in the tax administration. We have decreased complexity, decreased taxes, decreased litigation, increased transparency, increased tax compliance, increased trust on the tax payer.
Amidst all these efforts, the number of people filing income tax returns in the last 6-7 years has increased by about 2.5 crores. But it is also true that in a country of 130 crores it is still very less. In such a large country only 1.5 crore people pay the income tax. I will urge the people of my country, those who are capable of paying taxes as well as those running the various industrial organizations to think over it. The country has to introspect on this matter. Introspection is necessary and indispensable for a self-reliant India. And this responsibility is not just with the tax department, but for every Indian. I request all those who are able to pay tax, but are not in the tax net yet, to come forward with self-motivation. 15th August is just two days ahead. Let us commemorate those who have sacrificed their lives for the country’s freedom. You too will feel like making a contribution.
Come let us fulfil the resolve of the New India, self-reliant India, respecting the spirit of this platform of trust, rights and duties. Once again, congratulations to the present and the future honest tax payers of the country, I wish them all the best and this has been a major decision! I can’t thank the Income Tax officials enough. Every taxpayer should also congratulate the income tax authorities because in a way they have restrained themselves. They have cut down on their own strength and rights. Who would not be proud if the officials of Income Tax Department come forward in this manner! Every countryman should be proud about it. And probably in the past, due to the system, people would not have liked to tread the path of paying taxes. Now the path that has been created has become an attractive way to pay taxes. And so, let us also take advantage of this system to build a magnificent India and come forward to join this system. I once again thank you very much and wish you all the best! I also thank Nirmala ji and her entire team for taking a number of positive decisions that have long lasting effects for the bright future of the country. I once again congratulate everyone, thank you all.
Thanks a lot